In this article we discuss the AUDUSD Correcting from Short-term Oversold and possible scenarios ahead.
Current Price Action
The AUDUSD price has drawn two consecutive candles with large shadows touching the +3 Bollinger Band. Today, it is making fresh lows. That is a typical oversold spot. The most probable continuation is the price to visit the middle Bollinger line, as shown in the interactive chart at the bottom of the page.
Descending Channel
We can observe that the price crossed to the upside the descending channel (in red) in which it was moving since February. This movement was convincing. Therefore, the current price action can be regarded as just a minor correction, even if the price goes down to the mid-Bollinger line. That is a common price-action behaviour.
MACD
The MACD, as we know reveals the short-term fair value sentiment compared to its mid-term value. The MACD on the AUDUSD pair is currently bullish and close to the zero line. That may indicate that, although we see short-term weakness, there is still bullish steam potential.
Short-term projection
The short-term price projection while still keeping a bullish bias is for the pair to visit the 0.718 recent support level, which matches the projected Bollinger Band mid-line.
From there we can expect two scenarios:
- Based on the Bollinger Bands price behaviour and the current state of the MACD indicator, we see a bullish continuation for the AUDUSD, with a target at the 0.74 key level.
- If the price brokes down the 0.718 level, the pair’s price may continue downwards and retouch the upper trend line of the descending channel, on a visit the 0.705 level.
Chart 1: AUDUSD Daily. (Click 
in the right upper side of the chart to enlarge)
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