AUD/USD Technical Analysis: Looking for Bounce to Sell Anew
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- AUD/USD Technical Strategy: Pending Short at 0.7165
- Aussie Dollar Completes Head & Shoulders Top, Drops to Three-Month Low
- Setup Established to Re-Enter Short Following Near-Term Corrective Bounce
The Australian Dollar dropped through range support below the 0.72 figure against its US namesake, seemingly completing a bearish Head and Shoulders top chart pattern. Prices are now aiming to test rising trend line support guiding the pair higher since early September.
A daily close below 0.7089, the intersection of aforementioned trend line support and the 23.6% Fibonacci expansion, opens the door for a test of the 38.2% level at 0.6906. Alternatively, a reversal above the 23.6% Fib retracement at 0.7204 paves the way for a challenge of a horizontal pivot at 0.7283.
We re-entered short AUDUSD at 0.7273 and subsequently booked profit on half of the trade. The remainder of the position was stopped out at breakeven following the FOMC rate decision. We are now looking to get back in but prices are too close to support to justify the trade from a risk/reward perspective. As such, we will set up an entry order to short the pair at 0.7165. If triggered, the trade will initially target 0.7089 and carry a stop-loss activated on a daily close above 0.7204.
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