As the Australian dollar versus the US dollar currency pair printed a pin-bar at the important 0.6858 major support level, it can be said that the bulls are turning their engines on for 0.7000.
The trending swing that began after the confirmation of the double resistance area that consists of the upper line of the descending channel and the area defined by 0.7055 and 0.7013, respectively, stopped at the 0.6700 psychological level, from where an appreciation began. The rally brought the price above the strong support of 0.6858.
In such cases, when the price reconquers an important level, a confirmation as support or a consolidation above it is a natural unfolding. In the Australian dollar’s case, as the price did not departure too much from the level it pierced, the consolidation scenario is the best fit. So, the price rallied, pierced the level, and now consolidates above it by printing candles that signal indecision i.e. small bodies and long tails.
But, at a certain point in time, something must happen so that the market participants know that the consolidation is over and the rally is resuming. One way in which this can materialize is a pin-bar that pierces the support — of course — but keeps its body — or at least the open and close prices — above the pierced support. And this is exactly what happened with the August 17 candle. To this adds that its low confirms the low of a previous candle at 0.6831, one which started a nice rally that extended all the way to the aforementioned double resistance area from where the trending swing began int he first place.
So, if the price does not invalidate the pin-bar (doesn’t make a lower low and closes above 0.6858), then 0.7000 is the next target. If the pin-bar fails, the price will retrace to 0.6800, which is another good spot to start a rally from, one that targets the same 0.7000.
The appreciation stopped at the 50.00 projection of the Fibonacci retracement, but the fall was limited by 38.2.
If the price manages to close back above 0.6855, then the next target would be 0.6933, which is doubled by the 61.8 projection.
As same as for the daily chart, if 38.2 is not able to keep the bears in check, 23.6 might serve as a good place for a bullish comeback, an appreciation from there targeting 50.0 first, followed by 61.8.
Levels to keep an eye on:
D1: 0.6858 0.7013 0.6800
H4: 0.6855 0.6933 0.7003 and the Fibonacci retracement levels (mainly 23.6 38.2 50.0 61.8)
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