Price & Time: Reversal Shaping up In The Aussie?
- Inverse H&S on the daily AUD/USD chart
- Correction looming?
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Trading patterns often get a bad rap. Part of this probably has to with the funny names some are given. Detractors question their validity, but what they fail to realize is that all chart patterns are really doing is describing a certain situation in the market. When used in conjunction with other methods of analysis they can give some interesting insight into the psychological makeup of a market. Take AUD/USD for instance. The daily chart shows what most technicians would refer to as an “inverse head & shoulders”. This is really just another way of describing a situation where the Aussie has failed to extend to new lows after being in a persistent decline. The implication is that the market is vulnerable to a correction higher. There are various rules or guidelines one can use to determine what “triggers” a pattern, but for us a close over .8245 today or Monday would probably be enough to get us more excited about the prospects of further upside. On the flipside, a move back under .8065 would negate the positive pattern prospects and re-focus lower.
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AUD/USD Daily Chart: January 15, 2015
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: .8245 (Gann), .8295 (WTD High)
Support: .8160 (Fibonacci), .8065 (WTD Low)
Strategy: Buy AUD/USD
Entry: Buy AUD/USD if it closes above .8245 within the next couple of days
Stop: Daily close below .8150
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.