Can AUD/USD Break the Bull Pennant?

AUD value evaluation:

• The bullish pennant sample can construct after value motion digests a latest pattern.
• The bull pennant formation is commonly approached as a continuation sample, in search of the unique pattern to proceed after digestion takes the type of a symmetrical wedge.
• Q2 has supplied the AUD with features in opposition to the USD, can AUD bulls proceed this momentum by way of Q3?

AUD/USD Exhibiting Bullish Pennant Set Up

The AUD/USD pair has come off a powerful Q2 for AUD bulls resulting from US quantitative easing in addition to higher than anticipated Australian financial information. Worth motion is at present consolidating inside a bullish pennant formation with near-term breakout potential. Worth has been respective of the trendlines at each help and resistance (yellow) while wading by way of the pennant. The bullish pennant theoretically pertains to a continuation sample which on this case might result in stronger upside value motion.

AUD/USD 4-hour chart:

Chart ready by Warren Venketas, IG

The every day chart beneath highlights the Fibonacci retracement taken from January 2018 excessive to March 2020 low. The breakout in early June past the 50% 6822.Eight stage has since helped to set help over the previous month.

Specializing in a break above or beneath the pennant formation might be key for merchants seeking to establish both an extension of medium-term bullish impetus, or a reversal of pattern according to the long-term bearish pattern.

AUD/USD every day chart:

Chart ready by Warren Venketas, IG

AUD/USD STRATEGY MOVING FORWARD

Bulls will likely be eying a break above the trendline resistance stage for additional upside momentum with preliminary resistance possible coming from the newest swing highs at 6975.2 and 7064.6 (marked in blue) respectively. If value surges by way of these latest swing highs, the following stage of main resistance (blue rectangle) will come by way of the 61.8% Fibonacci stage – 7132.7.

From the bearish perspective, bears could also be looking out for a break beneath the trendline help stage with quick resistance coming by way of the 50% Fibonacci stage – 6822.8. Current NFP information has strengthened this bearish outlook with stronger than anticipated information.

You will need to word that breakouts will be false with validation usually wanted to verify the sample. With this in thoughts, sound danger administration approach all the time be noticed.

CAN BULLS PULL AUD/USD TO FRESH 2020 HIGHS IN Q3?

IGCS reveals retail merchants are at present significantly brief on the pair, with 61% of merchants at present holding brief positions (as of this writing). We usually take a contrarian view to crowd sentiment, and the actual fact merchants are net-short suggests AUD/USD costs might proceed to rise.

— Written by Warren Venketas for DailyFX.com

Contact and comply with Warren on Twitter: @WVenketas

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