AUD/USD has registered an impressive drop, but now it seems a little oversold. The pair is fighting hard to recover despite the RBA rate cut. The Reserve Bank of Australia has cut the Cash Rate by 0.25% as expected. The pair ignores the rate cut, it is too oversold to resume the downside movement.
Actually, the price has registered only a false breakdown below the down channel support line and now is trying to approach and reach the upside line. AUD/USD has decreased as much as 0.6433 level, it has developed a Pin Bar at the end of the bearish movement, but the outlook is still bearish as long as the price is trading within the down channel's body.
- AUD/USD Technical Analysis & Forecasts
AUD/USD is trapped within the descending channel, the false breakdown below the downside line has signaled a potential rebound, but only a valid breakout from this pattern will announce a larger upside movement.
MACD is developing a bullish divergence according to the H4 chart. AUD/USD has managed to come back above the Pivot Point (0.6520), it has retested this level and now tries to approach the downtrend line.
- TRADING TIPS
The pair has increased in the last hours despite the RBA rate cut. Earlier, AUD/USD tumbled in the last weeks and it was too oversold to drop further, probably the rate cut was priced in and now the currency pair could try to recover after the massive drop.
AUD/USD maintains a bearish outlook as long as the price stays within the down channel's body, a false breakout or a rejection from the resistance line followed by a drop below the PP (0.6520) could signal a drop towards the downside line again and towards the 0.6433 low.
We can search for long opportunities only after a valid breakout from the descending channel, the first upside target is seen at the 0.6689 - 0.6676 area. It is now recommended to go long on this pair only based on the bullish divergence. AUD/USD has climbed in the short term also because the USDX continues to drop.
