H4 double-bottom pattern may confirm upside

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery.

April’s 370-pip advance has, as you can see, landed May within striking distance of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

With reference to the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis -

Fashioned in the form of a near-full-bodied bull candle, daily price faces the possibility of revisiting supply from 0.6618/0.6544. It should also be emphasised this area comes with a 127.2% Fib ext. level at 0.6578 and a nearby 161.8% Fib ext. level at 0.6642. Traders will also likely include the 200-day simple moving average (SMA) at 0.6671.

April 21 low at 0.6253 is visible as the next possible support band on this chart; breaking lower reveals demand at 0.5926/0.6062 may come under fire.

H4 timeframe:

While the harmonic Gartley formation, boasting a defining limit at the 78.6% Fib level from 0.6433 (blue), remains a point of interest on this timeframe, it’s still worth keeping an eye on local price action.

H4 price, as you can see, recently pencilled in a double-bottom scenario out of demand at 0.6356/0.6384, with yesterday’s action confirming the pattern by breaking through Tuesday’s high at 0.6476 (red arrow) and establishing a take-profit target around 0.6578 (green boxes).

H1 timeframe:

Aside from a modest dip to 0.6450 into the US session, Thursday ran with a series of bullish candles and powered into 0.65 and a converging trendline support-turned resistance. This also hauled the RSI indicator into overbought waters.

Above 0.65 we see little stopping price from making a run for 0.6550 and a large area of stacked supply between 0.6612/0.6543, which also comes with a nearby 161.8% Fib ext. point at 0.6539.

Structures of Interest:

Monthly price shows room to approach 0.6664; daily price also shows room to extend towards 0.6544, while H4 price as an upside target (set by the double-bottom pattern) at 0.6578.

Aside from H1 testing 0.65, higher timeframes suggest we could be heading higher. Therefore, a break above 0.65 could be in the offing, which may see intraday breakout buyers make a play, targeting 0.6539 as an initial target.

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