- AUD / USD seeks to extend the corrective slide from the five-month summits.
- Another potential drawback is the potential bullish channel on the hour sticks.
- Overbought RSI and profit taking could support the bears.
The AUD / USD consolidates the strong correction of the five-month highs of 0.69983 reached at the start of Asia, while the bears are waiting for a new catalyst for the next downward push.
The Aussie cut gains after Australian GDP contracted, as expected, in the first quarter. Meanwhile, the markets have taken this as an excuse to take profits off the table after the relentless rise seen in the mainline so far this week.
The higher-yielding AUD / USD strongly rallied to the tale of a more vigorous economic rebound, as large economies emerge from closures and travel bans imposed by the coronavirus pandemic.
The general weakness of the US dollar in a risky market environment continues to offer some support to bulls. At the time of this writing, the aussie is adding 0.55% to trade at 0.6931, with an additional margin of correction likely, as suggested by the technical configuration on the hourly graph (1H).
Despite the upsurge, the spot flickers in a rising channel formation over 1 hour, with a break below the support of the trend line of 0.6914 to validate the formation. Sellers will regain control below it, opening the floors for a simple moving average (SMA) test going up from 9 p.m. to 0.6888.
If the bears fail to defend the 21-HMA support, the slip could extend to the confluence of the target of the model and the bullish 50-HMA near 0.6824 / 20.
The hourly Relative Strength Index (RSI) is overbought and has turned south, indicating some short-term downtrend.
Alternatively, a rebound on the channel support could see the spot revisit the multi-year summits. A break above which could expose the key 0.7000 level to buyers.