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.
AUD/USD Daily Chart (highest levels since June 2018)
AUD/USD 4-hr Chart (using channel as guide)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
