AUDUSD briefly breached the key 0.75 level on Tuesday to hit a seven-week high of 0.7511. But prices failed to close above this resistance level and are trading below it early on Wednesday.
The 0.75 level is also close to the 50% Fibonacci retracement level of the downleg from 0.7833 to 0.7144 (April to May decline) and lies at 0.7488. This Fibonacci level is a critical level and has been tested before recently with the same result of failing to close above it, making it a very strong resistance level. So if it is breached, it could quickly lead to a move towards the 61.8% Fibonacci at 0.7570 and then to the 0.76 level. This would change the short term neutral bias which the pair has been in since early June.
Since the daily RSI is above 50 in bullish territory and trending up, this suggests there is scope for more upside moves in the market. Also the indicator is not in overbought territory yet.
Alternatively, if prices continue to get rejected at the 50% Fibonacci resistance level and fall back down, immediate support lies at 0.7408 (38.2% Fibonacci) and just below it at the 200-day moving average at 0.7395. A further decline brings 0.73 into view and a move below this would shift the short term neutral bias to bearish and could see a resumption of the downtrend that took place from the peak of 0.7833 down to 0.7144.
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