Is The AUD/USD Upside Correction Over?

AUD/USD traded lower today, after it tested once again the 0.6210 resistance level marked by Friday’s high. Overall, the pair has been in a recovery mode since March 19th, but at the same time it has been forming a rising wedge formation. Now, the rate is testing the pattern’s lower bound and the 0.6115 zone. As long as the rate remains within the wedge, we would stay neutral. We prefer to wait for the exit before start examining the upcoming directional move.In order to turn our eyes to the downside, we would like to see the rate breaking the lower end of the formation, and even better, the 0.6025 level, marked by Friday’s low. Such a move may wake up the bears, who could push the action towards the Thursday’s low, near 0.5865. If they don’t stop there either, another break lower may set the stage for the low of March 23rd, at around 0.5700.Our short-term oscillators suggest that the recent recovery may have run out of momentum, which supports the notion that the rate could exit the wedge to the downside at some point soon. The RSI, although above 50, has turned down and looks to be headed towards that equilibrium level, while the MACD, although positive, has crossed below its trigger line and points down as well.What could turn the outlook back to bullish may be a strong recovery and a break above the 0.6300 zone. The rate would already be above the upper end of the wedge and also above the 200-EMA on the 4-hour chart. The bulls may then decide to climb towards the 0.6435 or 0.6460 levels, the break of which could allow extensions towards the 0.6680 area, slightly below the peak of March 9th.


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