The Australian dollar versus the US dollar currency pair seems to be trying to depart from the important 0.6700 support level.
After the confirmation of the strong resistance barrier represented by the upper line of the descending channel and the 0.7055 and 0.7013 levels, respectively, the price descended in a very convincing manner reaching the 0.6700 support, where it printed the first low, at 0.6676. After printing other two lows, the price rallied to the major support of 0.6858, which during the previous descent has been pierced like it wasn’t there, but which this time served as resistance, making the price revisit 0.6700 and print a new low at 0.6670.
Now, the lows of 0.6676 and 0.6670, respectively, can be considered as the lows of a double bottom, with the neck-line at the 0.6858 level. However, by the book, because the second low is lower than the first one, this structure cannot be considered a double-bottom, but it can be viewed — alongside the other lows that were repelled by 0.6700 — as a bottoming structure with its resistance at 0.6858.
Another noteworthy aspect is the fact that the bearish attempt to invalidate the rally from 0.6670 via the strong bearish engulfing on October 7 is failing from two perspectives. The first one is that the following two candles are inverted hammers, which are patterns that signal a potential upward movement. The current day is about to confirm them as it takes the form of a bullish candle — which still has to close to be an actual confirmation — but at the same time, it already confirmed a change because today’s high took out the previous days’ — October 9, respectively. The second one is that — see the blue rectangle — today’s candle opened higher than the high of the October 2 pin-bar‘s high and, on the other hand, printed — at the time of writing — the low at the October 2 pin-bar‘s closing price.
All this point to the price targeting 0.6800 first, and then 0.6858, with possible extensions beyond it.
The downwards movement that began at the 50.0 level of the Fibonacci retracement seems to have ended around the 0.0 level as the rally that came afterward etched an angled rectangle, a chart pattern that favors the continuation — in this case of the upwards movement. Even more, the price pierced the resistance line of the rectangle and by doing so reached the area above the 0.6746 level.
Regarding 0.6746, because it is a very important level — as it can be seen from the fact that the price respected it since the beginning of August — the price managing to get above it translates into the bears losing their steam. So, as the level is confirmed as support, advancement towards the 23.6 level and then 38.2 is just a matter of time.
Levels to keep an eye on:
D1: 0.6700 0.6800 0.6858
H4: 0.6746 and the Fibonacci retracement levels of 23.6 and 38.2
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