Struggle to overcome the resistance of the descending triangle

• AUD / USD regains ground lost early in the session, although it appears to be struggling to extend momentum.
• The formation of a descending triangle, mixed technical indicators warrant bullish caution.

The pair AUD/USD it has managed to recoup its intraday losses and was last seen trading in neutral territory, just below 0.7150 during the early days of the American session.

The bulls, however, appeared to be struggling to capitalize on momentum above a two-month downtrend line. Given the recent bounce from a major horizontal support near the key psychological level 0.7000, the aforementioned trend line constitutes the formation of a descending triangle.

That being said, the technical indicators on the hourly charts have again started to gain positive traction and support the prospects for further gains. However, the neutral oscillators on the daily chart have not supported any firm short-term direction, justifying the caution of aggressive bull traders.

Therefore, it will be prudent to wait for some solid follow-up buying, possibly above 0.7200, before confirming a short-term bullish bias and positioning for any further appreciation moves. The AUD / USD pair could then aim to test October’s monthly swing highs around the 0.7245 region.

Some subsequent purchases should help the pair move higher to regain the 0.7300 level. The positive move could extend and has the potential to push the AUD / USD pair towards resistance from the yearly daily closing highs, around the 0.7375-80 bid zone.

On the other hand, the 0.7100 level now appears to protect the immediate drop. Any subsequent decline could continue to attract some buying on the dips near 0.7050, which if decisively broken could make AUD / USD vulnerable to falling towards the horizontal support at 0.7000.

Technical levels