AUD/USD Correction Looms Following Bearish Engulfing Pattern
- AUD/USD Technical Strategy: Shorts Preferred
- Bearish Engulfing pattern on the daily offers warning
- Key resistance remains at 0.9440, support at 0.9330
A Bearish Engulfing candlestick pattern on the AUD/USD daily chart has superseded a Shooting Star formation and offers a warning signal for declines in the pair. 0.9440 continues to offer notable resistance, while a pullback is likely to be met by buying support at the psychologically-significant 0.9300 handle. At first glance, the setup appears promising for shorts, however traders should be mindful that the uptrend remains intact and a similar signal back in April failed to elicit a bearish reaction.
Daily Chart - Created Using FXCM Marketscope 2.0
A look at the four hour chart gives us a conflicting signal with a Bullish Engulfing pattern hinting at an intraday bounce. However, the formation has yet to receive confirmation from a successive up-period, and may face a limited response given the context provided by the daily.
4 Hour Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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