AUDUSD has been trading sideways since the middle of August as its month-long slide came to a halt, while since late August, price action has been centred around the flatlining 20- and 50-period simple moving averages (SMA). During this period, a support base has been established between 0.6380 and 0.6400, while to the upside, the Ichimoku cloud has stood in the bulls’ way.

The momentum indicators point to a mixed bias in the near term. The fast stochastic (%K) has started to steady a bit after its bearish crossover with the slow stochastic (%D). The MACD, meanwhile, is attempting to climb above zero, having managed to hold above its red signal line for the past few sessions.

If the positive momentum that’s started to take shape in the last four-hour session gains more traction, the price could soon punch through the Ichimoku cloud and head for the previous peak of 0.6487, which at the time coincided with the cloud top. Not far above this area is the 0.6500 level that acted as both support and resistance earlier in August. A rise above 0.6500 would embolden the bulls and pave the way for the 200-period SMA, which lies in the 0.6600 region. AUDUSD twice failed to break above this point during August.

However, if the cloud top proves too difficult to crack, the focus would likely switch to the downside and the 0.6400 support. If this defence line breaks, the next test will be the nine-month low of 0.6364, after which traders would turn their attention to the 0.6300 level. A drop below this handle would open the path to the October 2022 low of 0.6169.

To sum up, it is too soon to predict an end to this choppy sideways pattern. AUDUSD would either have to make a new high above 0.6487 or a new low below 0.6364 to signal the start of a new uptrend or downtrend.