AUDUSD Ready to Complete a Major Head and Shoulders Pattern
The AUDUSD pair looks poised to complete a major Head and Shoulders, which is a type of pattern that is typically taken to signify probable bearish reversals in the wake of the May meeting of RBA's Governing Board.
The AUDUSD has been developing the aforementioned Head and Shoulders pattern for quite some time now, and the pair is now seemingly finally ready with the establishment of the Right Shoulder. This signifies a likely breakdown below the neckline of the pattern.
Interestingly enough, the latter coincides with the 38.2 per cent Fibonacci retracement level at 0.76201, a breakdown below which would make it even more decisive.
Accordingly, the temporary consolidation of the price action below the 23.6 per cent Fibonacci at 0.77690, which roughly outlines the upper boundary of the Right Shoulder, represents a strong indication that the direction of the price is indeed ready to reverse.
First, the price would have to penetrate below the 50-day MA (in green) and the 100-day MA (in blue) before it gets ready to test the 38.2 per cent Fibonacci. Afterwards, the new downtrend would be ready to attempt diving towards the next psychological target - the 61.8 per cent Fibonacci at 0.73794.
The market has been range-trading since the 26th of February, as illustrated by the ADX indicator, which confirms that the preceding uptrend is now completed. Given the rising selling pressure depicted on the Stochastic RSI, a breakdown below the H&S now seems even more likely.
The AUDUSD has been developing the aforementioned Head and Shoulders pattern for quite some time now, and the pair is now seemingly finally ready with the establishment of the Right Shoulder. This signifies a likely breakdown below the neckline of the pattern.
Interestingly enough, the latter coincides with the 38.2 per cent Fibonacci retracement level at 0.76201, a breakdown below which would make it even more decisive.
Accordingly, the temporary consolidation of the price action below the 23.6 per cent Fibonacci at 0.77690, which roughly outlines the upper boundary of the Right Shoulder, represents a strong indication that the direction of the price is indeed ready to reverse.
First, the price would have to penetrate below the 50-day MA (in green) and the 100-day MA (in blue) before it gets ready to test the 38.2 per cent Fibonacci. Afterwards, the new downtrend would be ready to attempt diving towards the next psychological target - the 61.8 per cent Fibonacci at 0.73794.
The market has been range-trading since the 26th of February, as illustrated by the ADX indicator, which confirms that the preceding uptrend is now completed. Given the rising selling pressure depicted on the Stochastic RSI, a breakdown below the H&S now seems even more likely.
