AUD/USD remains very bullish, with a high probability of the uptrend continuation. Any small pullback could be considered as a potential buying opportunity for the short to medium term.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
Key support levels: 0.6635, 0.6600
Key resistance levels: 0.6674, 0.6700
Price Action: On the 4-hour chart AUD/USD formed a triangle pattern throughout April 30 – May 20. But on the May 20 price broke above the triangle, suggesting the continuation of the uptrend. We can also see that price always remained above the 200 Moving Averages, Simple and Exponential. This also confirms that the trend is strongly bullish and is likely to continue.
After producing the high on May 27, when the price reached 0.6680, the AUD/USD corrected down and rejected cleanly the uptrend trendline, after which price produced yet another higher high. All of this suggests that pair is likely to move towards 227.2% Fibonacci retracement level at 0.6764, with a potential 100 pip move. As can be seen, Fibonacci was applied to the last rejection of the triangle.
Potential Trade Idea:
We suggest waiting for a small pullback, ideally towards 0.6615 – 0.6635 area. This should provide a good risk/reward ration for this short term trade setup. The nearest resistance and the potential take profit level is seen at 0.6464, which corresponds to 227.2% Fibs. In order to meed the 1:2 Risk/Reward ratio, the stop loss must be place at 0.6585.