Is AUD/USD ready for another push higher?
This chart has tended to overshoot in the past before a swift move higher. The trendline has been tested four times in the past. It has rallied virtually every session (14 out of 16 days, with two minor down days) in the four sessions following a failed break. The average gain in the four days that follows a failed break is slightly more than three cents.
On factor that raises some concerns is that the daily Bollinger hasn’t tested the lower band like in other instances. This raises the possibility of a further correction.
On the hourly charts, we see further reason for guarded optimism. Since the peak at 94 cents on Nov. 16, the rebounds have followed a similar pattern with a rebound to the 61.8% and 38.2% Fibonacci levels. The most recent decline has already rebounded above the 61.8% level, suggesting a 100% retracement to 0.9210.
With this sort of scenario in mind, a short-term trader may wish to go long AUD/USD now, risking no more than 0.9100 with a target of 0.9200. After that target is achieved wait for any pullback to establish new AUD/USD longs, never risking more than 0.9100.