AUDUSD Technical Analysis: Double Top Forming Below 0.7050?

AUDUSD TECHNICAL OUTLOOK: BEARISH

• AUDUSD hints at double top with Bearish Engulfing candle pattern
• Confirming longer-term reversal calls for one-month trendlinebreak
• July’s swing top near 0.7050 continues to mark immediate resistance

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The Australian Dollar tried its luck on the upside once again. Last week’s attempt at bearish reversal was cut short above the 0.69 figure and followed by a retest of downward-sloping trend resistance capping gains since early December 2018. Sellers might yet prevail however as the appearance of a Bearish Engulfing candlestick pattern hints a Double Top reversal is in the works.

Zooming in to the four-hour chart appears to bolster the case for a downside scenario. Prices have demonstrably breached support defining the upswing from last week’s bottom, signaling that the move has been exhausted. Near-term support is holding back a deeper selloff thus far however, warning that the case for a reversal rather than mere consolidation is as-yet unconfirmed.

Breaking the broader upward trajectory established along swing lows over the past month seems like it would be a more convincing indicator of downward follow-through. That would amount to clearing the block of back-to-back support levels in the 0.6934-53 zone. Several minor inflection points aside, achieving such a break probably sets the stage to challenge the pivotal January 2016 bottom at 0.6827.

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

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