AUDUSD Ascending Channel Correction Ongoing

AUDUSD has been trending higher within an ascending channel on the short-term time frame, with the pair bouncing off the channel bottom around the 0.7098 swing low before staging a sharp rally to the 0.7200 swing high.

Price has since pulled back to the mid-channel area and is currently hovering near the Fibonacci retracement levels, which could draw buyers back in to sustain the climb.

The 38.2% Fib is at 0.7161, which is close to where price is currently holding. A deeper correction could reach the 50% level at 0.7149, while a larger pullback might extend to the 61.8% Fib at 0.7137.

Any of these levels coinciding with the channel support could be enough to keep losses in check and attract dip buyers looking to join the uptrend at a better price.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. Both moving averages are converging near the current price area, though, so a hold above these dynamic support levels would be key to keeping the bullish structure intact.

Stochastic has pulled back from the overbought zone and is now turning higher from the mid-range area, suggesting that sellers are losing steam and buyers are beginning to return. If the oscillator continues its climb, it could signal a fresh wave of bullish momentum pushing price toward the channel top.

RSI, meanwhile, dipped close to the oversold region before bouncing and is now heading north, leaving plenty of room for buyers to push AUDUSD higher. A sustained hold above the Fib levels could set the pair back on track toward the 0.7200 swing high or beyond if buying pressure picks up.

AUDUSD could take cues mainly from US data, including the ISM services PMI ahead of Friday’s NFP release. Risk-taking on account of geopolitical developments could also influence AUD direction.