**AUD/USD Upside Momentum Strengthens as Price Surges Past Moving Average Cluster**
*Adapted and expanded from original analysis by Forex Expert at InvestingLive.com*
## Overview
The Australian dollar (AUD) paired with the US dollar (USD) — commonly referred to as the AUD/USD currency pair — has recently displayed increased upward momentum following a significant technical development. The pair has broken above a tightly-packed area of moving averages (MAs), a move that may signal a shift in market bias towards the upside. This technical breakout has attracted the attention of traders and analysts, given its potential implications for short- and medium-term price direction. In this article, we will delve deeper into the recent price action, examine technical indicators, analyze fundamental influences, and consider potential scenarios for the AUD/USD pair.
## Recent Price Action and Key Breakout
Over the past several sessions, the AUD/USD pair has been locked in a narrow trading range, consolidating as it sought direction. However, the most recent candlesticks signal renewed strength for the bulls:
– **Bullish Breakout:** The AUD/USD has successfully climbed above a cluster of short and medium-term moving averages, including the 20-day, 50-day, and 100-day simple moving averages.
– **Closing Above Resistance:** The daily close above these MAs is significant, as they were previously acting as a resistance zone that capped upward advances for several weeks.
– **Momentum Shift:** This technical development, in combination with increased trading volume, suggests that buyers are returning to the market with greater conviction.
## Technical Analysis: Dissecting the Upside Bias
### Moving Averages as Technical Road Signs
Moving averages, particularly the 20, 50, and 100-day timeframes, are closely watched by traders for signs of trend strength or reversal. Their convergence and the price’s interaction with them often mark key turning points:
– **The “Cluster” Effect:** When several moving averages gather closely together, they reinforce a zone of support or resistance. Breaking above this cluster is interpreted as a market assertion of a new directional bias.
– **Historical Precedents:** Previous instances where the AUD/USD broke above a moving average cluster were often followed by sustained rallies, provided fundamental headwinds didn’t contradict the technical move.
### Key Support and Resistance Levels
– **Immediate Support:** Following the breakout, the cluster of moving averages now shifts from resistance to support, potentially cushioning price pullbacks.
– **Next Resistance Targets:** The pair faces immediate resistance at the previous swing high of 0.6750, followed by longer-term hurdles at 0.6820 and 0.6890.
– **Psychological Levels:** The 0.7000 mark remains a key psychological level that could attract significant selling pressure if tested.
### Indicators Confirming the Bullish Outlook
A deeper look into popular momentum and confirmation indicators reveals further nuances:
– **Relative Strength Index (RSI):** The RSI has moved above the neutral
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