AUDUSD has been in a steady decline after its latest bullish breakout from the rectangle encountered resistance at 0.6898, validating a double top pattern. Moreover, in the near term, the pair has exited the sideways pattern to the downside, while its break beneath both the 50- and 200-day simple moving averages (SMAs) has painted a gloomy technical picture.
The momentum indicators currently suggest that bearish forces are intensifying. Specifically, the RSI is negatively charged below its 50-neutral mark, while the MACD is declining further below zero and its red signal line.
Should the retreat resume, the price could initially test the 2023 bottom of 0.6457. Slicing through that region, the pair might descend towards levels not seen in months, where the September 2022 low of 0.6362 could curb further downside attempts. A break below the latter could open the door for the November 2022 low of 0.6271.
Alternatively, if the pair manages to halt its decline and storm back higher, the previous support regions of 0.6563 and 0.6584 could prove to be the first hurdles for the bulls to conquer. Surpassing the latter, the price might challenge the 50-day SMA, currently at 0.6698. Further advances might then cease at 0.6817, which is the upper border of the rectangle.
In brief, AUDUSD has dipped below its rangebound pattern amid intensifying negative momentum. A failure to re-enter the range could lead to more severe losses, but traders should not rule out a potential rebound as the pair is approaching oversold conditions.
Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
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