The Rise of AUD/USD: A Closer Look at the Potential for Growth
The AUD/USD currency pair has recently hit a new high for the year, reaching 0.6839 on Thursday. This move comes after a significant upward trend that began back in September. While the pair has dipped slightly back down to just above 0.6800, there is still potential for further growth.
Analyzing the AUD/USD Daily Chart
- Price is currently displaying mild bearish divergence with the Relative Strength Index (RSI) indicator. This divergence occurs when the price hits a new high, but the RSI does not follow suit. This discrepancy suggests underlying weakness in the pair, indicating a potential for a pullback.
- In the event of a correction, key support levels to watch include 0.6800 (July high), 0.6755, and 0.6698 (August 22 swing low).
- Despite the bearish divergence, the overall trend for AUD/USD remains bullish since the September low. Following the principle of “the trend is your friend” in technical analysis, there is a likelihood for continued upward movement in the pair.
- A breakout above the 0.6839 yearly high would confirm a continuation of the uptrend, with a target set at the 0.6870 level (December 2023 high).
Analysis of the AUD/USD Movement
The AUD/USD pair’s recent surge to a new high for the year presents both opportunities and risks for investors. Here’s a breakdown of the key points:
Opportunities:
- The uptrend that began in September indicates a positive trajectory for the pair, potentially leading to further gains.
- A breakout above the current high could signal a continuation of the upward movement, with a target set at the December 2023 high.
Risks:
- The bearish divergence with the RSI suggests a potential for a pullback in the near term, highlighting the importance of monitoring key support levels.
- Investors should be cautious of the underlying weakness indicated by the RSI, as it could impact the pair’s ability to sustain its upward momentum.
Overall, while the AUD/USD pair shows signs of strength with its recent high, it is essential for investors to consider both the potential for growth and the risks involved in its current movement.