As the war of words between Australian dollar (Exchange:AUD=) bears and bulls continues charts indicate that the bears may have the right call in the short term.

Comments from Reserve Bank of Australia (RBA) Governor Glenn Stevens late last year that he would like to see the AUD trading at $0.85 against the U.S. dollar (New York Board of Trade (Futures): =USD) raised expectations that it would weaken significantly this year after. However, expectations for continued loose monetary policy by global central banks and continued Chinese reserve diversification limited downside momentum.

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Yet, growing expectations that the RBA may cut interest rates before year end to tackle the stubbornly high currency could see near-term downside.

The AUD is developing a long-term uptrend breakout pattern, but the breakout is not developing at this time. The weekly chart shows the classic Guppy Multiple Moving Average (GMMA) trend change breakout pattern. This starts with a test of the lower edge of the long-term group of averages in the GMMA Indicator. The breakout pattern is flowed by a retest of the upper edge of the long-term GMMA and completed with a breakout above the upper edge of the long-term GMMA. This signals the start of a new uptrend.

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The GMMA analysis is also consistent with the broader strategic analysis based around the support and resistance levels. There is strong resistance near $0.94. While the AUD clustered around this level in recent months, in recent weeks it reacted away from this level, which suggests a retreat towards longer-term support near $0.88. This retreat and rebound pattern is consistent with the consolidation that develops at the end of the longer downtrend from $1.06.

In the short-term, traders will watch for a retreat from $0.94 with the potential for support and rebound from near $0.90. There is a lower probability of a rebound from near $0.92 followed by a successful breakout above the resistance near $0.94. This type of behavior is well suited to the ANTS trading method which is designed to capture these shorter-term moves.

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The longer-term pressure on the AUD is bullish. A narrow pullback followed by a strong rebound breakout above $0.94 has the first upside target near $0.97.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders - www.guppytraders.com. He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.