AUD/USD is establishing a near-term uptrend and the next is targeting the 200-period SMA

• AUD/USD reversed the August 5 lows and hit higher, establishing a new uptrend.
• The pair could even see further gains to the 200-period SMA in the 0.6630s.

AUD/USD has likely reversed its short-term downtrend since recovering from the August 5 lows and will continue to extend higher.

The pair recovered from the early August lows, forming a typical trend reversal indicator in the form of a long Japanese Hammer candlestick pattern on both the 4-hour chart (circled below) and the daily chart (not shown). .

AUD/USD 4 Hour Chart

Since then, the pair has started a new sequence of rising highs and lows on the 4-hour chart, denoting the formation of a new short-term uptrend. Given that “the trend is your friend,” this uptrend is biased to extend even higher.

A break above 0.6605 (August 9 high) would provide confirmation of a higher continuation to a target around 0.6639 at the 200-period simple moving average (SMA) and 50-period SMA days. These major SMAs are expected to cap further gains, at least temporarily.

AUD/USD has broken above the 50 and 100 SMAs, indicating strong bullish momentum, and the Relative Strength Index (RSI) is not yet overbought, suggesting more room for more upside.