It’s been a while since I’ve put on a weekly chart, so I think it’s about time that I show a potential long-term technical setup for the position traders. On AUD/USD’s weekly chart, you can see that the pair just formed a very clear bearish divergence. Price made a “lower high” but the Stochastic failed to do the same and formed a “higher high” instead. Also note that the pair bounced off a significant falling trend line a few weeks ago, which suggests that the bears are in full control of the pair. Both these technical signals show the pair has more room to fall, possibly towards the rising trend line support.
Is that a breakout I see? Why, yes it is! After trading within an ascending triangle for a couple of weeks, the pair finally broke out to the upside. Momentum seems to be strong, as the last candle was very bullish. The body was long and the candle’s close was very near its high. If buying pressure persists, price could visit former resistance at .8150 soon!
Look at what we have here… It looks like USD/CAD’s downtrend has stalled! If you’re looking to go short on the pair, it might be prudent to wait for a better entry. The pair seems to be in the middle of a retracement as price has stalled and the Stochastic is showing that conditions are oversold. If the pair does pull back, it could go all the way to the 50% Fibonacci retracement level (also a former broken support level) before finding resistance. Keep a close eye on this, bears!
To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.