The AUD/USD has been consolidating since making a low on the year at 0.7626 as we can see in the 4H chart below. We saw a second attempt to test 0.7626 that failed and price has since drifted higher.
Bullish Breakout: Then, after another period of short-term consolidation, AUD/USD held above a common support pivot of 0.7750, and is now pushing above the February consolidation range with resistance at 0.7876. Note in the 4H chart that price action also broke a falling speedline that was coming down from a high in January at 0.8295. It is now testing the 0.79 handle and the 200-period simple moving average (A break above the 200-period SMA would another sign of bullish construction.)
Confirmation and Upside: At this point, a pullback should find support at or above 0.78 or the bullish breakout could be invalidated. However, if AUD/USD does confirm the price bottom, there is upside first to the 0.8025 pivot, before opening the 0.8295 high on the year. But because there is still a prevailing downtrend, let’s limit the bullish outlook to 0.8025 until we can see further evidence of support above 0.79.
When we look at the daily chart, we have a few key technical factors for the short-term:
1) Just above 0.79, there seems to be a falling trendline and the 50-day SMA, which can be seen as resistance factors. Now, if price falls from these resistance factors and breaks below 0.78, we might have bearish continuation.
2) There will be another resistance in the 0.8025-0.8035 support/resistance area. If price can hold below this area, the overall picture would still be bearish despite a broken trendline.
3) A break above 0.8035 however can introduce more upside risk, towards 0.8295 high on the year, and where the 100-day SMA resides.
Previous Post by Author: Gold and Silver in Double Bottom Attempts