Dropping back into the range signaling a possible bearish reversal

• AUD/USD sits at upside resistance and reverses lower, falling back into its range.
• It threatens a short-term trend reversal and the MACD is about to cross below the signal line.

AUD/USD reverses and begins to decline after what appears to be a false breakout above the range top.

AUD/USD Daily Chart

The Aussie pair have now started to fall back into the range. This may be the start of a new short-term downtrend that could take AUD/USD back to the 0.63 second range lows, however, it is still too early to tell with confidence.

The blue moving average convergence divergence (MACD) line is threatening to cross below the red signal line, and if it does, it would add further evidence to the argument that AUD/USD is trend-reversing.

AUD/USD may have formed a measured movement pattern in August and September as it rose from the bottom to the top of the range. Such patterns resemble zigzags, and the lengths of the A and C waves are similar or related to Fibonacci.

The Australian pair has reached an initial bullish target based on the extrapolation of the A wave of the above measured Move with a 61.8% Fibonacci. This target is around 0.6115. This is further evidence that the uptrend may have peaked and a new downtrend is currently forming. For more confirmation, the price should fall below the 0.6785 level (Sept 20 swing low). Such a move would be expected to reach an initial downside target of 0.6709, the level of the 50-day simple moving average (SMA).

Until then, there is still a risk that the downside movement could stall and the uptrend resumes, taking AUD/USD higher again. A break above the 0.6942 high of 30 Sep would confirm a resumption of the uptrend and target 0.6988 (high of 14 Feb ’23), followed by 0.7156 in a bullish case (high of 2 Feb ‘ 23).