Price action seen in Australian dollar’s performance versus its US counterpart is affected by the conflicting perspectives presented by the different timeframes in the currency pair’s technical analysis.
Long-term perspective
On the daily chart (D1), the pair is contained within the descending channel that debuted at the start of February, 2018. The current phase is a consolidation one, being limited by 0.7308 as resistance and 0.7055 as support, and resembles a falling wedge. Although this type of pattern signals a potential appreciation, such a development should be met with great reserve due to the likelihood of a quick drop fueled by the sellers awaiting the confirmation of the channel’s resistance. Another thing to note is that the false break of the 0.7055 support is not a very convincing one, since two candles — the ones corresponding to March 7 and March 8, respectively — were able to close under this support area. A healthy false break should have been short-lived and thus met with a much more aggressive buying pressure — like the one on October 26, 2018, — whereas the false break in discussion doesn’t show an all-in optimism from the buyers. So, as long as the price remains contained within the descending channel and under the 0.7308 resistance, any appreciation is an opportunity for the bears to make a new leg down.
Short-term perspective
On the 1-hour chart (H1), AUD/USD is in an ascending move, which started on Mach 8, 2019, from the 0.7003 support area. As part of this ascending move, a broadening top pattern can be seen. This type of pattern signals a short-term bullish continuation. So, the confirmation of 0.7097 (which corresponds with the 0.7100 psychological level) as support could trigger an appreciation to the next H1 resistance, 0.7147, which corresponds with the resistance areas discussed for the D1 chart (i.e., of the descending channel and falling wedge, respectively). On the other hand, if price continues under 0.7097 we should expect a depreciation to the next H1 support area of 0.7047, with the piercing of the support trendline of the ascending move and — after the confirmation of 0.7047 as resistance — the fall towards 0.7003.
Levels to keep an eye on
D1: 0.6858 0.7055 0.7201 0.7308 0.7483
H1: 0.7003 0.7047 0.7097 0.7147 0.7200
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