AUD/USD is trading at 0.7108 level and it seems heavily overbought in the short term after the failure to touch, retest, the uptrend line. The pair has managed to increase after it escaped from the upward channel, but now it could develop a downside movement if it drops again below the 0.7096 level.

We have a support area between the 0.7025 and the 0.7096 levels, a breakdown below this zone will really confirm a larger drop. Technically, when the price gets out from an up channel, it should decline, AUD/USD has increased only to test and retest the uptrend line, the incapacity to do this signal a potential drop.

• AU/USD Trading Tips

Buy if the pair touches 0.7210 level, the next targets are seen at the 0.7300 and higher at the 0.74.

Sell AUD/USD if the price reaches the 0.7080 level, the first target will be at the 0.7025, while the second target is seen at the 0.6831.