AUDUSD Upside Risks Linger Despite Heavy Retreat

#OPINIONLEADER#

AUDUSD has snagged around the ascending 50-period simple moving average (SMA) around 0.7279 after its latest deep retracement from a four-month high of 0.7440. The SMAs are essentially defending the rally that began from the February 24 trough of 0.7094.

The short-term oscillators are endorsing the bearish drop and have yet to convincingly signal a shift in momentum to the upside. The MACD looks set to pierce into negative territory after accelerating far beneath its red trigger line, while the RSI is hinting of a pause in bearish momentum. The stochastic %K line is marginally above its %D line and is flirting with the 20 oversold level, indicating that buyers are finding some footing at the 50-period SMA.

In the positive scenario, traction off the 50-period SMA would need to initially overcome the 0.7300-0.7310 nearby upside constraint before tackling the region of resistance from the mid-Bollinger band at 0.7339 until the 0.7354 inside swing low. Conquering the latter obstacle too, the bulls could then propel to test the upper Bollinger band at 0.7425 and the adjacent four-month high of 0.7440.

Alternatively, the 50-period SMA at 0.7279 is the immediate support hindering additional developments to the downside. That said, for sellers to sustain the downward trajectory in the pair, they would need to drive the price below the lower Bollinger band at 0.7256 and the neighbouring 0.7232-0.7246 support border. Successfully breaching this key barrier, which is reinforced by the 100-period SMA, the bears could then target the 200-period SMA at 0.7179 before eyeing the 0.7158 trough.

Summarizing, AUDUSD has retraced around 50.0% of its recent rally but the bullish bearing remains active above the 0.7232-0.7246 boundary. That said, a price descent below the 0.7158 trough could spark growing worries about negative tendencies in the pair.