**AUD/USD: Examining the Recent Bullish Reversal and Potential Upside Toward 0.7210**
*Adapted and expanded from the analysis by Anthony Cheung, Seeking Alpha*
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**Introduction**
The AUD/USD currency pair has recently garnered attention due to a notable bullish reversal in its price action. This change has occurred near key technical levels and is now raising expectations among traders and analysts for a further rally, potentially targeting the 0.7210 level. This article delves into the technical and fundamental drivers behind this trend shift, exploring the underpinnings of the reversal, the importance of the 20-day moving average, and the broader macroeconomic landscape. Additional insights from reputable financial sources are incorporated to provide a comprehensive outlook for the AUD/USD pair.
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**Recent Technical Developments in AUD/USD**
– The AUD/USD currency pair had been trading in a range during the months preceding this reversal, often encountering resistance and failing to gain upward momentum.
– In recent sessions, strong buying pressure has emerged, with the pair rebounding from the 20-day simple moving average (SMA), traditionally considered an important technical support.
– Technical chartists often look at the 20-day SMA as a short-term trend guide. The AUD/USD’s ability to find support here signals renewed optimism among buyers.
– After touching the 20-day SMA, the currency pair reversed sharply, confirming buyers’ presence and hinting at a shift from consolidation to an upward trend.
– The next major resistance zone lies near the 0.7210 mark, a previous high and critical psychological level for traders.
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**Key Support and Resistance Levels**
– **Immediate Support:**
– 20-day SMA (recently tested and held)
– 0.7000 (psychological round figure, historically significant)
– **Immediate Resistance:**
– 0.7130-0.7150 (minor tops, could act as hurdles for continuation)
– 0.7210 (major resistance; a breakout could attract additional buyers)
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**Momentum and Oscillators**
– The Relative Strength Index (RSI), a measure of momentum, has been climbing, reflecting strengthening bullish sentiment but remaining below overbought territory.
– The Moving Average Convergence Divergence (MACD) indicator is also trending higher, reaffirming the bullish bias as short-term momentum picks up.
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**Price Action Outlook**
– Sustained closes above the 20-day SMA indicate the building of a fresh bullish base.
– If AUD/USD maintains its footing above this average, the next logical technical target is the 0.7210 area.
– A break above 0.7210 could see the pair attracted toward mid-0.72s, should market sentiment and fundamentals remain supportive.
– However, sellers could emerge on approach to this region, and traders should watch for profit-taking or loss of momentum.
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**Macro Drivers Shaping AUD/USD**
Several fundamental factors are influencing the
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