AUD/USD Forms a Bullish Outside Bar Above Key Support Area

AUD/USD Forms a Bullish Outside Bar Above Key Support Area

AUD/USD has been bullish since making a low on the year at 0.7532. The 4H chart shows the bullish trend extending to 0.8163 about a month and a half later.

AUD/USD 4H Chart 5/15
audusd 4h chart 5/15
(click to enlarge)

The 4H chart shows that this week, even though AUD/USD price has been retreating from 0.8162, it is still bullish. Price is still above the 200-, 100-, and 50-period simple moving averages, which are sloping up and in bullish alignment. Finally, the 4H RSI has held above 40 after pushing above 70, which reflects maintenance of the bullish momentum from at least the last week.

If price can hold above 0.80 and the 4H RSI above 40, we still have a pretty clear bullish trend. However, to the downside, a break below 0.7950 might be needed to open up a sideways one. Then, a break below the 0.7850 support pivot would be needed to open up a bearish continuation scenario. Inability to climb back above 0.80 would add to the bearish scenario.

Now, before we look down at these lower support levels, we should note that the 4H chart shows a bullish outside bar after AUD/USD tagged 0.80. This could lead to a bullish continuation swing. Let’s examine this possibility in the 1H chart.

AUD/USD 1H Chart 5/15
audusd 1h chart 5/15
(click to enlarge)

In the 1h AUD/USD chart, we can see flag pattern developing. While the momentum is lost in the near-term (RSI fell below 40), price is still showing some bullish bias as it holds above the 200- and 100-hour SMAs. Now, a break above 0.8075 will clear both the flag resistance and the 50-hour SMA, which would open up the bullish continuation scenario.

In the bullish continuation scenario, AUD/USD has the 0.82-0.8215 support/resistance pivot in sight, then the 0.83 high on the year, near the 200-day SMA.

AUD/USD Daily Chart 5/15
audusd daily chart 5/15
(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at