AUD/USD is at make-or-break resistance where the price has recovered from the COVID-19 bear trend, retracing it in full and meets the 200-DMA, trendline resistance and prior daily support structure.
The recent escalation of a war of words between the US and China could not have come at a worst time for the bulls hoping for a prolonged uptrend.
However, the environment remains bullish from a purely technical standpoint, although weak hands will likely wish to reduce positions and take profit. For an upside extension, a stop-run clear-out through resistance and a bar-room brawl may need to take place first.
AUD/USD daily chart: Bulls meet confluence resistance area
Upside targets
A break of the trendline brings in the prior support structures and Fibos. The Fibonacci with most confluence comes as the 138.2% at 0.6757. A stretch to the 161.8% at 0.68 the figure is feasible, just below the neckline of the Dec-Feb H&S, 0.6826.
Bulls holding above support structure
Bullish 4-HR environment
At this point, it is not the cheapest entry-level and bulls will be looking for a discount prior to boarding this train very late in the trend. More often than not, it takes a few attempts to break trend lines, especially when there is a confluence of so may resisting factors, such as the 200-DMA and prior support structure. Instead, a bearish case should be considered.
Short on a break below support structure, stop above recent highs and 200-DMA/trendline resistance:
0.6400 meets the 161.8% Fibonacci extension and prior support structure. 0.6450 is a prior target on the way there with the 138.2% and April highs.
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