- AUDUSD is edging lower today, reacting to yesterday’s key event
- The pair remains very close to the new 2023 low registered on September 6
- The momentum indicators appear to support the downleg at this juncture
AUDUSD is experiencing its second straight red candle, canceling out most of the upleg recorded since the September 6 low. The overall sentiment remains bearish despite the aggressive sell-off that took place after the formation of the double top pattern in July. Therefore, all eyes are on the momentum indicators at this stage for any clues on the next likely leg in AUDUSD.
In more detail,
the RSI continues to hover below its 50-midpoint and now appears to be heading lower. More interestingly, the stochastic oscillator is currently battling with its moving average. The outcome of this battle could play a key role in the next AUDUSD move. On the other hand, the Average Directional Movement Index (ADX) seems uninterested in the recent price action and is stuck below its 25-threshold.
Mixing up the technical picture, an inverse head-and-shoulders pattern appears to be forming with the neckline set at the 0.6521 region. However, a move above this level is necessary for this bullish pattern to become valid.
Should the bulls decide to react to the current pullback, they would try to overcome the May 31, 2023 low at 0.6458, and then set course for the 0.6521-0.6529 region. This is populated by the 23.6% Fibonacci retracement level of the April 5, 2022 – October 13, 2022 downtrend, the rectangle’s lower boundary and the 50-day simple moving average (SMA). Even higher, the 100-day SMA stands at 0.6606.
On the flip side, the bears probably want to capitalize on the current move and gradually test the September 6, 2023 low at 0.6356. They could then possibly set sail for the November 3, 2022 low at 0.6271, with the main target being the October 13, 2022 low at 0.6170.
To sum up, the renewed bearish pressure supported by most momentum indicators appears to bear fruits for the bears but the battle for the next move in AUDUSD has just begun.