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What is the near term outlook on AUD/USD?


iwantmoney

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Let's first look at the long-term picture. AUD/USD is currently in a downtrend with the price below both the weekly moving averages. The RSI is also in the negative zone. However, since mid-August, the pair is attempting to form a base. 

Attempts to sink the pair below the support of the range (colored blue) have failed. This shows buying at lower levels. We like the way the RSI has also formed a positive divergence. So, with these positives, does it look good in the short-term. Let's look at the daily chart and find out.

Currently, the pair is trading inside the descending channel. A small positive is that it has not broken down of the channel since early-Jan. of this year. However, on every bounce from the support, it has made a lower high, which is a bearish sign.

This shows that the bulls are buying at the support of the channel but the buying dries up at higher levels. After the current bounce, the pair is likely to reach the small downtrend line. If this resistance is scaled, the pair can reach the resistance line of the descending channel. If the bulls succeed in breaking out of the channel, it should pick up momentum.

On the downside, a breakdown below the channel will be a negative development that can drag prices lower towards the support line. There is no clear buy setup at the moment.

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