AUD/USD, AUD/CAD Key Chart Patterns. Are Breakdowns Looming?


AUSTRALIAN DOLLAR TECHNICAL FORECAST: BEARISH

  • AUD/USD breakdown may occur after retesting broken support level
  • AUD/CAD aims lower after rejection at Descending Triangle resistance
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AUD/USD Technical Forecast: Bearish

The Australian Dollar’s technical posture has deteriorated considerably against the US Dollar and may be on course to weaken further.AUD/USD descended through a support line formed by the bottom of aSymmetrical Triangle last week, with a subsequent drop to the 61.8% Fibonacci retracement level.

Prices retraced higher but strength tapered off at the 38.2% Fib level, which sits just abovethe triangle’s lower bound. The pair then turned lower. The rejection turns support into resistance and lends a degree of validation to the bearish reversal signal. AUD/USD now appears poised for further losses, with the 61.8% Fib level possibly serving as a price target for sellers.

However, an extension lowerperhaps to the 78.6% Fibmay take place if last week’s low gives out. Intermediate support via the 50-day Simple Moving Average is a possible point of price contention. Another outcome would be a move back above the triangle’s trendline, invalidating the reversal signal in turn. On balance, a bearish near-term outlook seems to be the most probable path forward.

AUD/USD 4-Hour Chart

AUDUSD 4 hour chart

Chart created with TradingView

AUD/CAD Technical Forecast: Bearish

The Australian Dollar is in a more neutral stance against its Canadian namesake, although a slight bearish bias exists as a Descending Trianglepattern sets up a possible reversal. Prices have dragged lower over the last few weeks, putting in a series of lower highs to form the downward sloping trendline.

The latest swing high formed after the pair rallied from the triangle’s horizontal support. AUD/CAD is now attempting to break to the downside to open the door for another test of key support and a potential longer-lasting selloff. The 20-day SMA and 23.6% Fibonacci retracement – both anterior to the horizontal trendline – may supply potential support levels.

Overall, a bearish outlook appears to be the likely avenue in the short term. The alternate case, while less likely, would see prices climb and surmount resistance, giving way to the longer-term trend. Waiting for an exit from the Triangle pattern seems like a prudent approach, all things considered. The 38.2% Fib level along with channel support from the October 2020 swing low may be likely price targets if a breakdown does occur.

AUD/CAD 4-Hour Chart

AUDNZD chart

Chart created with TradingView

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AUD/USD, AUD/CAD TRADING RESOURCES

— Written by Thomas Westwater, Analyst for Finance Prop.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter





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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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