Bullish outlook for AUD/USD amid uptrend indicators

AUD/USD reached a peak of 1.10797 on July 2011, and has been on a consistent downtrend ever since. But several encounters with the psychological round number of 0.6700 were met with bearish rejections towards the second-half of 2019. Following the last price rejection in October last year at the key level, the tide turned and reverted to a long-term uptrend, forming higher highs and higher lows. At present, price is residing at the 0.6873 level after a bout of selling pressure. In spite of that, various signs seem to indicate a continuation of the larger uptrend.

Looking at the daily charts, a Fibonacci retracement was drawn, taking reference from the latest swing high and the low of 0.6700, dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. These ratios are considered key support and resistance levels. It may be observed that price rested on the 61.8% level and started to reverse slightly which indicates the weaning off of selling pressure.

Coinciding with the key support level is the oversold signal generated by the stochastic oscillator (5,3,3) falling below the reading of 20. The stochastic oscillator is a directional indicator as well as a measure of momentum. A reading above 80 signifies an overbought condition while a reading below 20 represents an oversold condition. This further validates the strength of the support level, favouring an upside move.