AUD/USD Price Analysis: Oversold oscillator advocates a reversal
- AUD/USD displayed a steep fall to near 0.6735 amid a V-shape recovery in the US Dollar Index.
- A breakdown of 0.6719 will result in the termination of the bullish trend for the Aussie asset.
- The RSI (14) is in an oversold position while the higher lows structure in the asset has yet not been scrapped.
The AUD/USD pair displayed a perpendicular fall after finding significant offers near the round-level resistance at 0.6800 on Wednesday. The Aussie asset has extended its losses as the risk appetite of the market participants has trimmed dramatically.
The US Dollar Index has witnessed a sharp recovery to near 104.20 and is expected to extend its gains further amid sheer volatility in the festive week. The impact of sheer volatility is also visible on United States equities as S&P500 slipped vigorously on Wednesday.
On an hourly scale, the Aussie asset is continuously forming higher lows, which indicates that the pair is in an upwards trend. The major has dropped sharply from 0.6800 and a breakdown of December 27 low at 0.6719 will result in the termination of the bullish trend. Therefore, it is high time that a responsive buying action toward the Australian Dollar could save Aussie bulls.
The 100-period Exponential Moving Average (EMA) at 0.6735 could act as a support for the asset. Apart from that, an occurrence of a bullish positive divergence is visible as the asset has not made a lower low yet while the momentum oscillator, Relative Strength Index (RSI) (14), has made a lower low. An oversold position from the momentum oscillator in an upside trend indicates a bargain buy for the market participants.
For a reversal move, the Aussie asset needs to surpass December 22 high at 0.6756, which will drive the asset toward Wednesday’s high around 0.6800, followed by December 13 high around 0.6880.
On the contrary, a breakdown of December 27 low at 0.6719 will drag the major towards December 15 low around 0.6677. A slippage below the latter will expose the asset for more downside toward December 20 low at 0.6629.
AUD/USD hourly chart
