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AUD/USD Technical Analysis: Candle Setup Hints at Topping

AUD/USD Technical Analysis: Candle Setup Hints at Topping

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Australian Dollar recoils from 10-month high, slips back below 0.78 figure
  • Formation of bearish Evening Star candle pattern hints at topping in progress

The Australian Dollar stalled after rising to the highest level in ten months against its US namesake, with prices edging lower to lose their grip on the 0.78 figure. The appearance of a bearish Evening Star candlestick pattern warns that a larger topping and downward reversal may be in progress.

A daily close below the 14.6% Fibonacci retracement at 0.7688 opens the door for a test of the 23.6% level at 0.7597. Alternatively, a push above the 38.2% Fib expansion at 0.7834 paves the way for a challenge of the 50% threshold at 0.7940.

Prices are too close to near-term support to justify entering short in line with our 2016 fundamental outlook from a risk/reward perspective. With that in mind, we will remain on the sidelines for the time being and wait for a better-defined trading opportunity to present itself.

Are you making this common mistake trading AUD/USD? Find out here !

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

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