• The AUD/USD pair reversed from the August 5 lows and moved higher, establishing a fresh uptrend.
• The pair may see further gains towards the 200-period moving average at 0.6630.

The AUD/USD pair has likely reversed its near-term downtrend since the rebound from the August 5 lows and will continue to rally.

The pair has rebounded from early August lows, forming a typical trend reversal indicator in the form of a long Japanese hammer candle on both the 4-hour chart (circled below) and the daily chart (not observable).

AUD/USD 4-hour chart

Since then, the pair has started a fresh sequence of rising highs and lows on the 4-hour chart, which indicates the formation of a fresh short-term uptrend. Given that “the trend is your friend,” this uptrend is set to extend even higher.

A break of 0.6605 (August 9 high) would confirm continued upside to a target around 0.6639 at the 200-period basic moving average (SMA) and 50-day SMA. These major SMAs are expected to cap further gains, at least temporarily.

The AUD/USD pair has broken through the 50 and 100-SMA levels, indicating a powerful uptrend, while the Relative Strength Index (RSI) is not yet overbought, suggesting further upside potential.