The AUDUSD is rallying sharply in the North American session and challenges the 100-day Exponential Moving Average (EMA) at 0.6701. Fundamental factors, but also an inverted head-and-shoulders chart pattern in the AUDUSD daily chart, underpinned the Australian Dollar (AUD), which is gaining 1.24%.

the AUDUSD probes the 100-day EMA, which, once cleared, could pave the way for further gains. Traders should be aware that the Relative Strength Index (RSI) is at bullish territory. So the path of least resistance in the AUDUSD is upward biased.

A slightly overbought RSI (14) on hourly charts suggests that any further gains are likely to remain capped near the 100-day SMA, currently around the 0.6700 round figure. This is followed by the 0.6740 barrier, representing the top end of a descending channel extending from May 2022, which should act as a pivotal point for the AUDUSD pair. A convincing breakthrough will be seen as a fresh trigger for bulls.

Spot prices might then accelerate the momentum towards reclaiming the 0.6800 round-figure mark, above which the AUDUSD pair could test the next relevant hurdle near the 0.6850-0.6855 supply zone.

On the flip side, the 0.6640-0.6635 region now seems to protect the immediate downside ahead of the 0.6600 round figure and the daily low, around the 0.6580-0.6575 area. Any further pullback is likely to attract fresh buying and remain limited near the 0.6545-0.6540 horizontal resistance breakpoint. That said, some follow-through selling will negate the near-term positive outlook and prompt some technical selling around the AUDUSD pair.

The next relevant support to the downside is pegged near the 0.6500 psychological mark, below which spot prices would turn vulnerable to test the 0.6440 support zone. The AUDUSD pair could eventually slide back to the 0.6400 mark. Some follow-through selling below the weekly low, around the 0.6385 region, will shift bias in favour of bearish traders.

AUDUSD to retest the trendline before further upside

Nov 12 2022