AUDUSD finds itself at a critical juncture, testing the key resistance level of 0.6543. Whether this signifies a potential trend reversal or simply a pause within the prevailing downtrend remains to be seen. Let’s delve into the technicals to understand the possible scenarios.
Upside Potential: Breakout or False Hope?
- 0.6543 Resistance Breech: Surpassing this level could trigger a further rally, potentially aiming for the upper boundary of the descending price channel on the 4-hour chart. This breakout would signal a potential shift in momentum.
Channel Resistance: Ceiling for the Bounce?
- Downtrend Context: However, even if the price climbs above 0.6543, the validity of the breakout rests on breaching the channel resistance. As long as this resistance holds, the recent bounce from 0.6442 might be interpreted as a temporary correction within the existing downtrend.
Support Levels to Watch for Downside Continuation
- 0.6495 Initial Support: If the bullish momentum fades and the sellers regain control, a breakdown below this level could indicate a renewed decline. This could lead to a retest of the 0.6442 support.
- Lower Targets: A further breach of 0.6442 would open the door for falls towards the 0.6400 area, further solidifying the downtrend.
Upside Breakthrough: End of the Downtrend or Retracement?
- Channel Breakout: A decisive surge above the channel resistance would be a significant development, potentially signifying the completion of the downtrend from 0.6870.
- New Resistance: In this scenario, the next potential resistance level to watch would be around 0.6624. Only a break above this level would truly suggest a sustained trend reversal.
Overall Sentiment
The price action around the 0.6543 resistance and the channel resistance will be crucial in determining AUDUSD’s next move. A breakout above both levels could indicate a potential trend reversal and upside towards 0.6624 or higher. However, a decline below 0.6495 and a subsequent breach of 0.6442 would reinforce the current downtrend and aim for targets around 0.6400.