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AUD/USD Technical Analysis: Bounce May Yield Short Trade Setup

AUD/USD Technical Analysis: Bounce May Yield Short Trade Setup

2018-12-07 01:30:00
Ilya Spivak, Head Strategist, APAC
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AUD/USD Technical Strategy: FLAT

  • Aussie Dollar break of counter-trend support hints downtrend is resuming
  • Four-hour chart hints at near-term bounce before bearish follow-through
  • Looking for upswing to yield improved risk/reward setup for a short trade

Get help building confidence in your AUD/USD strategy with our free trading guide!

Another attempt at reviving the Australian Dollar down trend against its US counterpart appears to be in progress. Prices have broken rising counter-trend support set from the swing bottom in late October, hinting that a period of corrective gains has run its course and dominant bearish bias is ready to reassert itself.

Australian Dollar vs US Dollar chart - daily

A look at the four-hour chart casts doubt on immediate follow-through however. The pair put in a bullish Morning Star candlestick pattern and bounced above immediate trend line resistance, hinting that an upswing may be in the cards before further progress downward.

AUD/USD Technical Analysis: Bounce May Yield Short Trade Setup

Taken together, it seems like sellers may indeed reclaim the initiative before long but an opportunity to enter short with improved risk/reward parameters following a bounce might present itself. With that in mind, opting to monitor developments from the sidelines for now appears to be most prudent.

AUD/USD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

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