Popular AUD/USD trading pair suffered a setback on Tuesday in the Asian session as it fought hard to maintain its daily gains for the first time in four days. With that, the pair fell back from a 50% Fibo retracement of January movements and the 21-days daily moving average.
AUD/USD price chart. Source TradingView
A Continuing Decline
Taking into consideration the ease of advance in the acceleration line during the AUD/USD recent declines along with the continuous downward break of former support from the 28th of January, AUD/USD bearish traders may possibly keep reins.
That been noted, there is a three-week-long horizontal around 0.7090-80 which resists an immediate downside in the leadoff to the 23.6% Fibonacci close to 0.7050.
Yet, it should be noted nonetheless that a downward break of 0.7050 might pause for a bit close to the 0.7000 thresholds before directing traders towards the latest multi-month lows about 0.6965.
As an alternative, the 21-days daily moving average and the outlined support that has become a resistance, both around 0.7130 and 0.7165 respectively, do restrict an immediate upward movement of the AUD/USD trading pair.
After the 61.8% Fibo retracement point along with a monthly increase close to about 0.7180 and 0.7250 respectively may be a challenge to the trajectory of recovery while trying to recall bullish traders.
The Aussie’s Imbalance
The pair has been swinging around the 100-day simple moving average (SMA) for the past couple of days without a proper balance. Nonetheless, the bearish Moving Average Convergence or Divergence (MACD) indicators and other reports’ sharp U-turn from 0.7250, showed last week Friday, has given a little more hope to the pair’s traders.
Consequently, a definite downside break of 0.7115 has become necessary for AUD/USD bearish traders to lengthen the recent dips in the direction of the 0.7100 benchmarks. Following that, January’s shedding of 23.6% Fibonacci retracement near 0.7050 will come ahead of 0.0700 psychological magnets in testing the AUD/USD bears, not overlooking the yearly bottom around 0.6965.
As a second option, the support line near 0.7155 and the 200-day SMA – simple moving average – zone of 0.7170 could create a restriction for short-term upward movements of the AUD/USD trading pair. It should also not be overlooked that AUD/USD bulls are being cautious till all the quotes are refreshed to a monthly high, currently around 0.7250.
Since the middle of the past week, AUD has been at the mercy of factors out of its control. As the Reserve Bank of Australia can do little to salvage the situation, the US Federal Reserve, on the other hand, is getting every measure ready to put the growing inflation under control.