AUD/USD takes a break during its uptrend

• AUD/USD is taking a breather after a strong rally. 
• It is biased to continue rising in line with the trend once the consolidation ends.
• The RSI is overbought but has not yet given a sell signal. 
   

AUD/USD has established a sequence of rising peaks and troughs on the 4-hour chart since it recovered from the August 5 lows. The sequence of higher highs and lows is indicative of a short-term uptrend, which given “the trend is your friend” is biased to continue. 

AUD/USD 4-hour Chart

The pair has stalled over the last few periods and started to trade sideways in the 0.6730s. A close above 0.6740, however, would probably indicate the start of a continuation higher. 

Further resistance lies at 0.6760 followed by 0.6799, the July 11 high. 

The Relative Strength Index (RSI) is in overbought territory, increasing the chances of a pull back. For confirmation of a correction in price, however, the RSI would have to exit overbought and re-enter neutral territory. 

Despite the overbought RSI, AUD/USD could still go higher, although long holders are not advised to add to their existing positions whilst RSI remains above 70.