The Australian dollar has staged a strong reversal against the US dollar over recent days, as increasingly positive risk sentiment helped the pair recover more than 200 points from the 0.7000 level.
AUD/USD analysis shows that the pair could advance towards the 0.7400 area if the 0.7200 resistance level is broken.
AUD/USD medium-term price trend
The AUD/USD pair largely failed to react to this week's RBA policy decision, as the central bank kept monetary policy unchanged as expected.
AUD/USD technical analysis shows that 0.7200 is increasingly important over the medium term. The 0.7200 level is the 50 per cent Fibonacci retracement of the September high to low, and the current October high.
Bollinger Band analysis on the daily time frame also highlights 0.7200 as technically important, with the 20-period simple moving average, or mid-band, located around that level. Gains above 0.7200 could provoke a technical test towards the upper Bollinger Band on the daily time frame, around 0.7400.
Traders should note that major trendline resistance from a rising wedge pattern is also seen around the 0.7400 area.
AUD/USD short-term price trend
AUD/USD technical analysis highlights that the pair is bearish over the short term, while the price trades under 0.7130.
The one-hour time frame shows that a bullish inverted head-and-shoulders pattern will be activated if the price moves above 0.7200. Analysis highlights that this bullish pattern holds an upside projection of more than 70 points.
Key short-term support for the AUD/USD pair is seen at the 0.7130, 0.7110 and 0.7080 levels.
AUD/USD technical summary
AUD/USD analysis shows that the pair could rally sharply over the short to medium-term if the 0.7200 resistance level is broken.