AUD / USD TECHNICAL ANALYSIS:
- AUD / USD completes the Rising Wedge pattern, hinting at the impending weakness ahead
- Initial support is just over 0.72, resistance starts at 0.7413
- The main additional H&S patterns claim a negative target close to 0.7120-30
The Australian dollar may be set to continue the slump that is coming out of the swing in early May. AUD /USD spent most of the month in consolidation mode after breaking down support, which was concentrated around 0.74. This friction created an ascending wedge pattern, which usually acts as a descent (reflected gradually in lower upward swings, indicating a fading rate of ascent).
Confirmation of the completion of the wedge pattern appears to be in place after the currency pair issued its lower limit on a daily basis. This seems to indicate a continuation of the downward trend, providing a basis for a descent to challenge the next meaningful backing layer in the 0.7222-44 turn zone.
Broadly speaking, the current sale follows the development of the head and shoulders (H&S) addition pattern, which has been developed since the beginning of the year and which was finally confirmed by a marked break through the neck support in mid-June. If prices can close to 0.7222 daily, the expected negative target for this model will be in the range of 0.7120-30. Immediately after this, the indicator is 0.70.
Neutralizing the immediate selling pressure is likely to require prices to return above a certain point above 0.7413. From there, it would probably be necessary to overcome a dense resistance block running up from the lower boundary of the H&S neck and through a central congestion area reaching 0.7705 to ensure lasting benefits. Otherwise, short-term gains can be seen as corrective in the context of a wider decline.
AUD / USD daily schedule created TradingView
AUD / USD TRADE RESOURCES
– Written by DailyFX.com APAC chief strategist Ilja Spivak
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