The AUD/USD currency pair has been on a downward trajectory since February 2024, with the downward trend being particularly notable as we approach the end of 2023. Technical analysis reveals several key insights into the current state of the pair and potential future movements.Currently, the pair is testing a downward trend line that can be traced back to the January high, as well as the 50-week moving average. Momentum indicators, such as the Relative Strength Index (RSI) and the stochastic oscillator, support the likelihood of further price declines. The RSI is declining towards equilibrium levels around 50, indicating weakening bullish momentum. Meanwhile, the stochastic is moving towards a bearish crossover in the overbought zone, suggesting that sellers may soon regain control.If sellers do indeed regain control, their first obstacle may be the 0.6320 area, which has acted as both support and resistance in recent months. A breakout below this area could lead to a further decline, potentially targeting the yearly low at 0.6265.
However, if buyers manage to regain control and break above the active downtrend line within the next year, the pair could potentially reach the long-term downtrend line, represented by the 100-week simple moving average at 0.6690. Above this level, key resistance barriers include the 0.6700 level and the 200-week moving average at 0.6750. A break above these hurdles would neutralize the technical picture and could signal a potential reversal in the downtrend. Overall, the long-term technical outlook for the AUD/USD currency pair remains decidedly negative. Only a break above the 0.6800 level would weaken the downtrend significantly. Confirmation of a resumption of the current trend would be provided by a pullback from the recently tested trend line.In conclusion, the AUD/USD currency pair is currently facing downward pressure, with momentum indicators suggesting further declines may be on the horizon. However, the potential for a reversal exists if buyers manage to overcome key resistance levels in the coming months. Traders should closely monitor price action and key support and resistance levels to gauge the pair's future direction.
