AUD/USD: Two months ago when I last reviewed the daily chart I had the idea that the mid Nov 2016 – mid Dec 2016 action was possibly a bear flag and that we were likely to go lower. I even placed an ‘X’ that you can see on the daily chart above at the point around 0.7060 where I thought it could possibly play out in full. Well, the bear flag did happen though not all the way down to 0.7060. Instead we got as low as 0.7151 and then backed and forth until we formed a triple bottom.
We have since risen from the breakout formed by the TB and have busted up through Fibs and combined MAs to move up to just short of 0.7700. Interestingly, the action since mid-Jan now looks increasingly like a bullish halfway hesitation and we may be on the 2nd leg up of that in this pair. If that’s the case then a potential target would be in the 0.7950 area…or off the top of the daily chart above. So this is where the situation is now. However, we have a few things to bear in mind. Firstly, there isn’t much resistance till 0.7750(dynamic) where the upper tine of the Apr2016 – Nov 2016 Schiff pitchfork upper tine is currently at.
Beyond that we have the Nov 2016 high at 0.7777 and then 0.7835 resistance. Secondly, I have a concern prompted by last Friday’s action that because we matched Thursday’s high but had a higher low that it perhaps might be a nascent tweezer top, the jury is out on that one. Now as for support, we’ve a band of support – the actual previously mentioned HH – between 0.7608 – 0.7507 with principle support at 0.7608, 0.7588, 0.7570, 0.7511 and 0.7507.
Nearby there is the Medium MA support(dynamic) at 0.7500 and the current combination of the 50% Fib at 0.7488 & the Long MA…also currently at 0.7488(dynamic). Overall, favour a further try higher and will change this to a bullish bullet point but as I have a twinge from the possible tweezer top, I’ll place a question mark against it.
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