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This pair recently busted through a long-term descending trend line and double bottom neckline. Can the climb resume after this retest?

Long AUD/USD Idea

AUD/USD is currently hovering around the broken trend line resistance, which happens to line up with an area of interest and the 38.2% Fib level at .6830.

AUD/USD Daily Forex Chart
AUD/USD Daily Forex Chart

Stochastic is still heading lower, though, so there could be room for a deeper pullback to the next Fibs. If any of these hold, the pair could bounce back to the swing high or rally by at least the same height as the double bottom reversal pattern, which spans roughly 200 pips.

I haven’t set any entry orders yet since I’m planning on waiting to see how Trump’s upcoming speech might impact trade deal negotiations and overall market sentiment. Recall that stronger hopes for an agreement late last week boosted the higher-yielding Aussie, but resurfacing doubts dragged it back down yesterday.

Other catalysts that could impact AUD price action include the quarterly wage price index and monthly jobs report while the dollar has the U.S. retail sales report to contend with on Friday.

This long-term trend strength tool suggests that AUD/USD is still in bearish territory but that it could turn the corner soon.

AUD Trend Strength from MarketMilk
AUD Trend Strength from MarketMilk

I’m considering hopping in a long position at market if bullish momentum and positive trade sentiment take AUD/USD past the .6870 level, and I’m planning on setting a stop below the .6800 mark and 50% Fib. As for my target, I’m eyeing an initial 200-pip PT.

What do you guys think?

Happy

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