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AUD/USD is having trouble making new 2024 highs.
Does this mean that Aussie traders are ready for a bearish reversal?
We’re taking a closer look at the 4-hour time frame!
AUD/USD 4-hour Forex Chart by TradingView
The U.S. dollar has been losing pips to its major counterparts as more traders expect the Fed to cut its interest rates (maybe by as much as 50 bps) in September.
Despite that, the Australian dollar has been having trouble making new 2024 highs against the U.S. dollar for the past few days.
One possible reason is China’s weaker-than-expected reports, which fuel global growth concerns and limit the demand of “risk” currencies like the Aussie.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. Suppose you haven’t yet done your homework on the U.S. and Australian dollars, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
AUD/USD, which found resistance at the .6800 psychological handle, is forming what looks like a Head and Shoulders pattern in the 4-hour time frame.
Are we looking at a bearish reversal in the making?
A couple more of those bearish wicks and candlesticks below the 100 SMA and .6700 psychological handle opens AUD/USD to a move to the .6685 Head and Shoulders “neckline.”
If this support test results in consistent trading below the “neckline,” we could even see a downside breakout that may take AUD/USD down to the .6630 previous area of interest.
An extended upswing for AUD/USD isn’t out of the question, however. If the pair finds a catalyst and enough bullish momentum to bust through the .6750 inflection point, the pair could head for higher areas of interest like .6800 or new 2024 highs.
Whichever bias you end up trading, make sure to use your best risk management moves and to follow your trading plan so you can trade for another day no matter how this setup turns out!
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