• AUD/USD fades bounce off 10-day SMA, stays directionless after two-day declines.
• Strong RSI favor buyers to defy the bearish chart pattern, yearly support line test sellers.

AUD/USD drops to 0.7753 while eroding the latest recovery moves from 10-day SMA ahead of Thursday’s European session. Even so, strong RSI conditions join the quote’s sustained trading beyond the short-term SMA and challenge the one-month-old bearish formation called “double tops” on the daily (D1) chart.

As a result, the quote is likely to remain lackluster unless keeping the range between the 0.7806 and 0.7739 levels comprising the horizontal resistance and 10-day SMA respectively.

An upside break of 0.7806, which is more likely, can easily overcome the previous month’s peak, also the highest since April 2018, to target the March 2018 high near 0.7920.

Meanwhile, a downside break of the 0.7739 support needs to break below an ascending support line from December 21, 2020, at 0.7600, before trying to confirm the bearish chart pattern by a break below 0.7560.

Overall, AUD/USD witnesses a pullback move due to the US dollar’s recovery. Hence, traders should remain cautious on either side of the stated levels.

AUD/USD DAILY CHART