Check out this classic chart pattern on the 4-hour time frame of AUD/USD!
Is the pair gearing up for a breakout soon? Or are we about to see further consolidation?
Here are the nearby inflection points I’m watching.
AUD/USD 4-hour Forex Chart by TradingView
This Aussie pair has formed higher lows and found resistance at the .6700 major psychological mark, creating an ascending triangle pattern that’s been holding since mid-May.
Price seems to be attempting a bullish breakout that could spur a rally of the same height as the formation, which spans close to 150 pips.
Can it sustain the move, though?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Australian dollar and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Dollar traders seem to be waiting nervously for the U.S. non-farm payrolls report, as this could have strong implications for Fed policy. Recall that the FOMC minutes revealed that policymakers are getting increasingly concerned about weak spots in the labor market, so an NFP miss could revive calls for more easing.
With that, an AUD/USD bullish breakout could take the pair to the next upside targets at R2 (.6730) then R3 (.6770), especially since the pair is already trading above the moving averages to confirm upside momentum.
On the flip side, a return in dollar strength could drag AUD/USD back down to the triangle bottom at S1 (.6630) or even for a bearish break to the next downside targets at S2 (.6590) then S3 (.6560).
Are you trading the U.S. NFP release on Friday? Which way do you think this pair could go?
