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AUD/USD Technical Outlook – Australian Dollar May Experience Setback vs US Dollar

AUD/USD Technical Outlook – Australian Dollar May Experience Setback vs US Dollar

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AUD/USD Technical Outlook – Australian Dollar May Experience Setback vs US Dollar

The move higher in Aussie may at the least pause in the coming week as the trend becomes extended; short-term technical structure to watch.

AUD/USD Highlights:

  • AUD/USD extended as new week arrives
  • Channel on the 4-hr chart to act as a guide

AUD/USD traded to its highest levels since early June 2018 in last week’s trade, a generally impressive feat considering where it was back in March. In the near-term the trend could at the least pause, if not experience an outright pullback.

To help guide the trading bias in the week ahead eyes will be on the 4-hr chart, where AUD/USD broke out from the confines of an orderly upward channel. It had been inside this structure for nearly a month, and with its recent move outside it could act as a “throw-over.”

A throw-over is an event that marks an exhaustion in the trend, commonly seen at the end of a clean orderly move like the one we have seen in Aussie. Using the upper parallel is the key from this point forward.

The top-side parallel was once considered resistance, so now it turns into the first source of support. Hold the line and a consolidation or immediate rise off it could unfold. This of course keeps the upside intact. Break below and this is where the recent leg higher becomes validated as a throw-over.

In this second scenario, this is where you will often times see a break to the bottom-side of the channel (again first to be treated as support) with an eventual break of it that potentially leading to an aggressive move lower.

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AUD/USD Daily Chart (highest levels since June 2018)

AUD/USD 1d Chart

AUD/USD 4-hr Chart (using channel as guide)

AUD/USD 4h Chart

AUD/USD Charts by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.