Forex Technical Update
The AUD/USD rallied from the 1.0525 pivot yesterday, staying in a rising channel (seen in the 4H chart), and advancing back to last week's high near 1.0683. Failure to break above and a subsequent decline in the US session sets up a range between 1.0525 support and 1.0683 resistance, with central pivot near 1.06. The 1H chart shows the market testing the central pivot. Also note that the RSI is testing 40. A price break below 1.06 and RSI reading below 40 should confirm the attempt to reach range support at 1.0525.
The 4H chart shows that if the market does indeed reach 1.0525, it would have anchored out of a rising channel, and would threaten a double top. The first factor of support is near 1.0480, or maybe even a bit lower near the outer and lower channel support. If we get a pullback that can't push above 1.60, we are likely confirming the top for a corrective rally. The conventional double top breakout target using the width of the pattern projected to the downside from the base, points to 1.0360, just above 61.8% retracement. That can be the next support/target area. Also mind the 50% at 1.0418.
While thinking about this topping scenario, remember, that the market is still bullish, with the RSI staying above 40, though inability to push back above 60 suggests consolidation. So, if the market does push the RSI reading above 60, we have to be prepared for a retest of 1.0683, with a break opening up 1.0763.
Fan Yang CMT is the Chief Technical Strategist of IBTRADE and FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.