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AUD/USD Technical Analysis: Double Top in the Works Near 0.81?

AUD/USD Technical Analysis: Double Top in the Works Near 0.81?

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar signals a double top has been established below 0.82 figure
  • Convincing break of secondary trend support sought for short trade setup

The Australian Dollar turned lower against its US namesake as expected, with a break of three-month trend support hinting a double top has been established. The turn lower followed the appearance of a bearish Evening Star candlestick pattern coupled with pronounced negative RSI divergence.

From here, a daily close below 0.7937 – marked by a secondary rising trend line and the 23.6% Fibonacci retracement – exposes the 0.7808-21 area (August 15 low, 38.2% level). Alternatively, a move back above the 14.6% Fib at 0.8009 opens the door for a retest of the July 27 high at 0.8066.

It seems prudent to wait for a definitive break of nearer-term trend support established from mid-August before committing to a short position, particularly as potent event risk in the form of the FOMC monetary policy announcement looms ahead. In the meantime, opting for sidelines seems most attractive.

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