AUD/USD has been in a sideways consolidation in August, and showed signs of breaking building this as a price bottom in September as price broke above the consolidation high. The 4H chart also shows the choppy attempt to round out a bottom. We can see a rising channel developing as the AUD/USD tries to break above the August consolidation. So far, this breakout has not sustained, and the market remains sideways. The 9/8 price action was sharply bearish, price fell from about 0.9375 to 0.9280 during the session.
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The thing is, this sharp decline does not rule out the possibility of a rounded bottom that is forming. In fact price is still within the rising channel in the 4H chart, though it is threatening to break the support. A break below 0.9270 should clearly show failure of a price bottom formation, and put the pressure back to he 0.9235-0.9240 lows from August, with a bearish continuation outlook.
When we look at the daily chart, we realize that all this price action in August and September so far is just noise. The dominant truth is that price is consolidating between 0.92 and 0.9505 (2014-high), or you can argue its between 0.92 and 0.9440 (a more common high).
If the current decline does extend below 0.92, we have a major bearish signal because AUD/USD would have completed a price top. This scenario opens up the 0.90 psychologically sticky level, with a more aggressive outlook toward the 0.8890 support/resistance pivot from January and March.
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At this point, even though the market has not signaled a bearish outlook just yet, the bullish outlook is shelved. It would take a brake back above 0.9350 to revive the bullish outlook, because this would take price back above the 100- and 50-day SMAs. Otherwise, we need to brace for an eventual test of the 0.92 support area.
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