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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar Bounce Stalls at Key Trend Line, Hints at Possible Downturn
- Opting to Pass on Short Position Pending Bearish Reversal Confirmation
The Australian Dollar moved higher against its US counterpart as expected following the appearance of a bullish Morning Star candlestick pattern. Prices have now stalled at trend line resistance capping gains since mid-May, with a Doji-like candle hinting a rejection downward may be in the cards ahead.
Near-term support is at 0.7088, the 14.6% Fibonacci expansion, with a break below that on a daily closing basis clearing the way for a challenge of the 23.6% level at 0.7041. Alternatively, a push above the 50% Fib retracement at 0.7173 – a barrier reinforced by the aforementioned trend line barrier – opens the door for a test of the 61.8% threshold at 0.7236.
Positioning is inconclusive for now. The candlestick setup points to indecision and may merely represent prices’ acknowledgement of an important technical ahead, marking a pause prior to an upside break rather than on-coming reversal lower. With that in mind, we will remain flat for now and wait for confirmation before pulling the trigger on a short position.
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