- AUD/USD risks further falls as technical set up remains bearish.
- Bears extend control after the rising wedge breakdown on the 4H chart.
- 100-SMA at 0.7782 is on the sellers’ radars, as the RSI looks vulnerable.
The sharp correction in AUD/USD from three-year highs of 0.8008 extends into early European trading this Friday.
The long positions unwinding continues, as the returns on the US Treasury yields appear more attractive amid ongoing reflation trade.
From a short-term technical perspective, the sell-off in the major gained momentum after the price confirmed a rising wedge breakdown on the four-hour chart in the last US session.
The selling pressure intensified in the overnight trades, as the bears took out the 50-simple moving average (SMA) at 0.7850.
Sellers await acceptance below 50-SMA on a four-hour candlestick closing basis in order to target the 0.7800 round figure.
The next relevant support of the upward-sloping 100-SMA at $0.7782 could limit the declines.
The bearish Relative Strength Index (RSI) also backs the case for additional downside.
To the upside, recapturing the 50-SMA support now resistance is critical in order to unleash further recovery gains.
Further up, the bearish 21-SMA at 0.7914 could be a tough nut to crack for the AUD bulls.
AUD/USD: Four-hour chart
AUD/USD: Additional levels
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