The Australian dollar versus the US dollar currency pair is at an important resistance area, but the bulls are very determined. The clues for which path the price will take lie in a few details.
The price is in a downwards movement since the mid of 2018, but is also limited by the support of 0.6858 and the resistance area of 0.7055 and 0.7013. Between this support and resistance zones the waves typical for a consolidative phase took shape. Speaking of shapes (or patterns), the only thing that the bears riding this descending trend do not like is the fact that the phase seems to be very similar with an inverted head and shoulders pattern.
So, instead of a trading period that enables them to push the prices further to the south, the bears find themselves at the end of a trend-changing pattern, the shoulders being marked by the first and last arrow, and the head by the second arrow. Even more, the pattern does not have a horizontal neckline, but an ascending one, which — because is made up by joining higher-highs — attracts even more bulls.
The tip of the iceberg is the fact that there only chance — at least for now — to confirm the resistance area was invalidated. On July 16, 2019, the price printed a bearish engulfing pattern, only to be invalidated by today’s high being — at the time of writing — above the opening price of the bearish engulfing.
Only a confirmation of the trend’s resistance line followed by a confirmation of the area of 0.7055 and 0.7013 as resistance will give the control back to the bears. Unless that happens, the path to 0.7200 is open.
After falsely piercing the 0.6935 level (and confirming the 61.8 Fibonacci retracement level as support), the price made an upwards move to the previous high of 0.7047. From there, the bears could have shorted strong, but they were barely able to extend until the 23.6 retracement level.
If the price manages to get under the 23.6 retracement level (which corresponds to the 0.7000 psychological level), then the bears might get another chance to pierce and confirm 0.6935 as resistance, targeting 0.6865. But if 0.7047 gives way, 0.7097 is just a matter of time.
Levels to keep an eye on:
D1: 0.7055 0.7013 0.7201
H4: 0.7047 0.7003 0.6935 0.6865
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