Australian Dollar Technical Forecast: AUD/USD at Crucial Juncture
AUD/USD Technical Outlook
- AUD/USD trading below neckline of head-and-shoulders pattern
- Not much more time left for price to negate the pattern
- Weakness from here will have 7400 level in focus
AUD/USD looking lower until it can indicate otherwise
AUD/USD is currently treading water below the neckline of a head-and-shoulders (H&S) pattern. Not only is price up against the neck-line of the formation, but also trading at a trend-line off the high (H&S head). This confluence of resistance makes the next move crucial.
To potentially negate the bearish implications of the topping pattern, a push above the intersecting lines is needed. A move above 7700 should do the trick to get price moving towards the right shoulder over 7800. At this time that is seen as the lower probability play, but should it happen then a rally could commence towards the 8000 level or better.
A drop from here will have the September high and 200-day in play, both intersecting right around the 7400 level. This is the first level of support to watch on weakness. This would be a pivotal test to see whether a decline can extend or will be truncated.
Given the sideways movement we have seen for the past couple of weeks, traders should be prepared to finally see a resolution. On this end, the above will be followed as a guide for the near-term trading bias.
AUD/USD Daily Chart (make or break…)
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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.