AUD/USD Technical Analysis: Triangle Setup May Set Stage for Drop
AUD/USD Technical Strategy: BEARISH
- Australian Dollar still waiting to find directional conviction near 0.71
- Descending Triangle setup hints at bearish bias, confirmation needed
- Bearish bias invalidation point at trend line just below the 0.72 figure
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The Australian Dollar continues to struggle for directional conviction against its US counterpart, with prices still stuck in choppy range near the 0.71 level. Still, overall positioning suggests the path of least resistance favors a downside bias.
An orderly decline started in January 2018 bottomed in October, giving way to prolonged consolation. Price action since then has traced out what appears to be a descending Triangle pattern. This is a setup typically indicative of bearish trend continuation.
Confirmation is still pending. A daily close below support in the 0.6982-7021 area would complete the Triangle, initially exposing the 0.69 figure thereafter. The pattern would imply far more ambitious downside objective below the 0.66 figure over the longer term however.
Invalidation of the bearish setup calls for a daily close above resistance in the 0.7093-0.7188 zone. A daily close above its outer layer may not necessarily imply a structural change of trend, but would probably defuse near-term selling pressure and set the stage for a retest of the January 31 swing high at 0.7295.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.