The AUDUSD ran into willing sellers earlier in the session at the 200-hour moving average currently at 0.70681, with bears leaning against that level on three separate tests. That repeated rejection kept sellers firmly in short-term control and helped fuel a downside extension into the European session early US session.
The move lower pushed the pair beneath the 100-hour moving average (0.7059) and the 100-bar moving average on the 4-hour chart (0.70475), increasing the bearish tilt intraday. The decline reached 0.7027, but stalled ahead of stronger support near 0.70142 — a level defined by last Friday’s low and the lows from February 6. That area remains a key downside target and risk-defining level for sellers.
As US equities firmed, risk sentiment improved and helped AUDUSD stabilize. The pair has since rebounded back into the cluster of moving averages, reinforcing the broader theme that has dominated for the past three weeks: consolidation.
Zooming out, price action has largely been confined between 0.7014 on the downside and 0.70988 on the topside. For the amount of time spent in this range, it remains relatively tight — a sign of compression. The overlapping moving averages within the band further confirm the non-trending, rotational nature of the market.
Going forward:
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0.7014 remains key support. A break below should open the door for increased downside momentum.
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0.70988 remains the topside ceiling. A sustained move above would shift the bias higher and likely spark a trend-type extension.
Until one of those boundaries gives way, expect continued range-bound, two-way price action. But the longer the compression lasts, the greater the potential energy for a directional breakout. Be aware. Be prepared.
This article was written by Greg Michalowski at investinglive.com.