AUD/USD's rally off September's low has paused as the down trend line off the 2018 high remains an obstacle, but bulls are still encouraged by the resilience of short-term structural support in the 0.7210/40 region.
Two incursions into that zone have met little follow through selling and further failure to break that support may lead bears to throw in the towel.
Short covering at that point could be intense as CFTC stats show that net-short aussie positions were aggressively built even as AUD/USD began a rally in mid-September.
A short squeeze is likely to see the 2018 down trend break as will the 55-DMA and daily cloud base.
A quick run towards 0.7380/90 resistance is then likely.
Should that zone break an argument could be made that a significant bottom has formed and bigger gains are due.
Bulls would then target 0.7480/90 and 0.7580/90 resistance zones.
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