AUDUSD surged on Wednesday after being in a consolidation pattern since the beginning of May. Prices were hovering around 0.7937 which is the March 24 high. Yesterday prices cleared this level and closed above it and extended higher today to 0.8162 in early European session trading. Upside momentum appears strong and this is also highlighted by the rising tenkan-sen and RSI. Meanwhile, the market is above the daily Ichimoku cloud and this is also a bullish signal.
To the upside, resistance comes in at 0.8294 which is the January 15 high. Support will be provided by 0.7937. A break below this would shift the bias back to neutral and bring prices back into the range that formed in the past two months between 0.7532 and 0.7937.
Overall, the near-term bias is bullish but for the longer term outlook we would have to wait for more confirmation. AUDUSD was in a down trend from the September 2014 high of 0.9400 to the April 2015 low of 0.7532 so the current price action could be viewed as a correction to the downtrend. The market has retraced 23.6 % of this downleg. As long as prices remain below the 50% Fibonacci then the probability of a trend reversal will be small.