AUD/USD used the former support area at the 0.7190 handle as a launching pad for an even deeper dive into the downside until it finally got pushed back at the 0.6900 major psychological level. Now, price is inching its way closer to the support-area-turned-resistance at the 0.7190 handle. Will price be rejected again, or will it try to push higher? Well, if we apply the Fibonacci tool, we can see that the 0.7190 handle sits right smack on the 61.8% retracement level, so perhaps some sellers will start nibbling-in. Furthermore, stochastic is already pointing downwards and moving away from the overbought region, so perhaps forex traders bullish on the pair may be exhausted already. The only problem is that the moving averages have already crossed-over into uptrend mode.
Based on break-and-retest setup on AUD/CAD’s 1-hour forex chart that we came up with on Monday, resistance did form at the 0.9450 handle. Unfortunately, price began to move sideways rather than downwards. Fortunately, a potential double top has formed, so our main directional bias is still to the downside. The forex chart pattern is rather small, though, since the volatility from the two tops to the neckline at 0.9400 is only around 80 pips. Looking at our technical indicators, the stochastic oscillator is already pointing downwards, but the moving averages have already crossed-over into an uptrend, so there’s also a possibility that the pair will keep moving higher instead.
After staging a downside breakout from the ascending triangle that we identified last Friday, it seems like price is now moving inside a tight descending channel. As y’all know by now, the most conservative way to play a descending channel is to look for resistance near the top of the channel. And would ya look at that? That’s were price is currently milling about. The technical indicators are on our side too since the moving averages are in downtrend mode and sloping downwards while stochastic is currently indicating potentially overbought conditions, so forex traders bearish on the pair may start coming in soon. As usual, make sure to practice proper risk management should you find a trade based on this or any of the other charts.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.AUD/CAD 1-hour Forex Chart