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Talking Points – AUD/USD, GBP/AUD, AUD/NZD, Head and Shoulders Pattern

  • Critical resistance prevented major AUD/USD upside reversal last week, key support held
  • GBP/AUD is closer to a reversal of the dominant uptrend from August, proceed with caution
  • AUD/NZD ends consolidation with a bearish reversal pattern, six-month uptrend is at risk

Have a question about what’s in store for Australian Dollar next week? Join aTrading Q&A Webinarto ask it live!

AUD/USD Technical Outlook: Neutral

The Australian Dollar spent most of its time trading sideways against its US counterpart last week. AUD/USD was initially on the verge of an upside reversal, but as anticipated key resistance held around the December/May 2016 lows. Meanwhile immediate support areas are preventing downside progress.

The first one is the September 11th low at 0.70830 which is also closely aligned with the 38.2% Fibonacci extension. Descending through that then leaves the October 8th low exposed at 0.70390. Until meaningful progress is made in either direction, the technical outlook for AUD/USD will have to be neutral.

AUD/USD Daily Chart

AUD/USD in Consolidation. GBP/AUD Risks Reversal, AUD/NZD More so

GBP/AUD Technical Outlook: Slightly Bearish

Unlike AUD/USD, GBP/AUD descended through a couple of critical support barriers last week. First, the range of former resistance from March/April between 1.84 and 1.85. Then the 2015/2016/2018 horizontal line at 1.83436. However, towards the last few moments of Friday, the British Pound found itself pushing higher against the Australian Dollar, leaving it right on the former area,

One barrier does need to be cleared until we can argue that GBP/AUD is about to reverse the upside progress it has made since August. This is a rising range of support from then, and descending through it would be a strong bearish signal. Given that there may be a chance of such an occurrence this week, the GBP/AUD technical outlook will change to a slightly bearish bias.

GBP/AUD Daily Chart

AUD/USD in Consolidation. GBP/AUD Risks Reversal, AUD/NZD More so

AUD/NZD Technical Outlook:Bearish

For some time now, AUD/NZD prices have been largely trading sideways. This was finally broken last week after a descent through 1.08430 as the pair closed at its lowest since June 28th. Looking at the weekly AUD/NZD chart, we can actually see a head & shoulders bearish reversal pattern. Last week’s close marked the break of the neckline.

With that in mind, AUD/NZD may be on the verge of overturning the upside progress it has made for the past six months or so. In the long run, and by measuring the distance between the head and neckline of the candlestick pattern, the pair may face the April 2015 rising trend line. But getting there first requires descending through 1.07777 followed by 1.06699 which may hold as support areas.

Taking this into consideration, the AUD/NZD technical outlook will have to be bearish, especially if we get confirmation of the bearish pattern via more closes lower next week. For updates or questions about the Australian Dollar, you may follow and reach out to me on twitter here at @ddubrovskyFX.

AUD/NZD Weekly Chart

AUD/USD in Consolidation. GBP/AUD Risks Reversal, AUD/NZD More so

** Charts created in TradingView

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter