AUD/USD Rebounds From Fresh 2021 Low With RSI Buy Signal Taking Shape

With that said, it remains to be seen if the decline from the February high (0.8007) will turn out to be a correction in the broader trend or a change in market behavior amid the flip in retail sentiment, but AUD/USD may stage a larger rebound over the coming days as the RSI climbs back above 30 to indicate a textbook buy signal.

AUD/USD RATE DAILY CHART

Image of AUD/USD rate daily chart

Source: Trading View

  • Keep in mind, a head-and-shoulders formation took shape earlier this year as AUD/USD traded to a fresh 2021 low (0.7532) in April, but the exchange rate negated the key reversal pattern following the failed attempts to close below the neckline around 0.7560 (50% expansion) to 0.7570 (78.6% retracement).
  • However, AUD/USD has fallen below the 200-Day SMA (0.7550) for the first time in over a year, with the decline in the exchange rate pushing the Relative Strength Index (RSI) into oversold territory for the first time since March 2020.
  • Nevertheless, the rebound from the fresh 2021 low (0.7477) may gather pace as AUD/USD snaps the series of lower highs and lows from the precious week, with the RSI indicating a textbook buy signal as it rebounds from oversold territory and climbs back above 30.
  • Need a close back above the 0.7560 (50% expansion) to 0.7570 (78.6% retracement) area to bring the 0.7620 (38.2% retracement) to 0.7640 (38.2% retracement) region back on the radar, with the Fibonacci overlap around 0.7720 (38.2% expansion) to 0.7760 (23.6% expansion) coming up next.
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