AUD/USD experienced a stall at upside resistance and reversed lower, falling back inside its range. This reversal is threatening a short-term trend reversal, with the MACD about to cross below its signal line. The Aussie pair has now started falling back inside the range, which could potentially be signaling the start of a new short-term downtrend that might take AUD/USD back down towards the range lows in the 0.63s. However, it is still too early to say with confidence. The blue Moving Average Convergence Divergence (MACD) line is also threatening to cross below the red signal line, providing further evidence to the argument that AUD/USD may be reversing trend.
During August and September, AUD/USD may have formed a Measured Move pattern as it rose from the bottom to the top of the range. Such patterns resemble zig-zags, with lengths of waves A and C being similar or related by Fibonacci. The Aussie pair reached an initial upside target based on extrapolating wave A of the Measured Move higher by a 61.8% Fibonacci, which lies around 0.6115. This further supports the idea that the uptrend may have peaked and a new downtrend is forming. Confirmation of this would require a break below the 0.6785 level, the September 20 swing low, with an expected initial downside target of 0.6709, the level of the 50-day Simple Moving Average (SMA).
Despite the potential for a downtrend, there is still a risk that the move down could stall and the uptrend resume. A break above the 0.6942 September 30 peak would confirm a resumption of the uptrend and target levels of 0.6988 followed by 0.7156 in a bullish case. This indicates that while there are signs of a trend reversal, the possibility of a continuation of the uptrend still exists. Monitoring key levels like the September 20 swing low and the 50-day SMA will be crucial in determining the future direction of AUD/USD.
In conclusion, AUD/USD’s stall at upside resistance and subsequent reversal lower suggest the potential for a short-term trend reversal. The formation of a Measured Move pattern and the achievement of an initial upside target add weight to the argument that a new downtrend may be forming. Confirmation would require a break below key support levels, while a resumption of the uptrend would require a break above recent highs. Monitoring technical indicators like the MACD and key levels will be essential in determining the next move for AUD/USD. Investors and traders should remain vigilant and adjust their strategies accordingly based on the evolving price action of the currency pair.
