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AUD/USD Technical Analysis: Topping Pattern Taking Shape?

AUD/USD Technical Analysis: Topping Pattern Taking Shape?

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar may be forming Head and Shoulders top below 0.77
  • Confirmation, improved risk/reward needed to trigger short trade

The Australian Dollar is struggling to find follow-through against its US counterpart having signaled reversal with the formation of a bearish Evening Star candlestick pattern. Prices may be tracing out a larger topping setup however as the outlines of a Head and Shoulders emerge.

Near-term support is at 0.7597, the 23.6% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of 0.7496 (rising trend line, 38.2% level). Alternatively, a reversal above triple top resistance at 0.7699 paves the way for a challenge of the August 11 high at 0.7760.

Prices have yet to confirm the Head and Shoulders setup as actionable. In any case, the pair is too close to near-term support to justify entering a short trade from a risk/reward perspective. With that in mind, opting for the sidelines seems most attractive until a better-defined opportunity presents itself.

What do past AUD/USD price patterns hint about on-coming trends? Find out here !

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