A short-term rally might take place for AUDUSD, as the pair formed a double bottom forex setup pattern on its 4-hour time frame. Price is still a few pips away from the neckline around the .8800 major psychological level but stochastic is indicating that there may be enough buying pressure left for a forex setup breakout.
MACD is also moving higher, indicating that bulls are in control of price action for now. An upside break from the neckline could yield as much as 250 pips in gains, which is the same height as the chart pattern. However, if the .8800 mark holds as resistance, the pair could move back to the bottom around .8550.
AUDUSD Forex Setup
Take note that price is also finding resistance around the simple moving averages, as the 100 SMA is still moving below the 200 SMA. This suggests that the forex setup downtrend could still carry on and even push AUDUSD to new lows.
The recent rate cut by the PBoC has been received positively by the Australian dollar, as this could mean renewed demand for commodity exports and better global growth prospects. There are no event risks for this forex setup today, although risk sentiment might be a key driver of price action.
Bear in mind that the dollar has also enjoyed strong support, thanks to the Fed’s hints that they might be able to hike interest rates next year. Risk aversion could also provide additional support for the lower-yielding safe-haven dollar if geopolitical tensions come back in play.
If so, AUDUSD could make another attempt at breaking below the .8550 minor psychological support and possibly establish new lows around the .8400 levels. Many are concerned though that the US dollar’s rallies have been overextended and that forex setup profit-taking might take place prior to the Thanksgiving holidays this shortened trading week.
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