- AUD/USD on the brink of a breakout out as price tests critical resistance.
- There is something for everyone on these charts, just prick your side and take your pick.
AUD/USD is one of the most compelling set-ups in the making on the forex board.
We are seeing that the price is some 28% higher since the COVID-19 recovery got underway. The price is meeting tough resistance and it may only be a matter of time before a tidal wave of supply kicks in.
However, that is not to say that there will not be any further room to the upside, for is resistance is broken with daily support structure subsequent of the break, then the upside will remain the favoured outlook.
On repeated failures of this resistance and a switch-up in the market's positioning, the path of least resistance will be to the downside.
At this juncture, it is a waiting game for longer-term investors who don't want to be caught up in the barroom brawl.
For shorter-term traders, there are plenty of opportunities on the cards.
Major resistance structure has taken crucial form
Bull/Bear sandwich, AKA, the barroom brawl
Three further attempts to test resistance so far
Tripple top in the making
Bearish divergence
This smoothed volume indicator is showing that there is less volume going through the market for the pair, indicating traders are on the sidelines with little interest to be holding longs at such extremes. A flurry of selling activity will likely lead to a surge of price action to the downside without much obstruction from the bulls, clearing out the stale stop losses.
Last dance from the buyers before major sell-off?
As we can see, from the On Balance Volume (OBV) and the Accumulation and Distribution indicators, as well as reading from COT data of late, we have seen a trimming of shorts in a phase of an accumulation from institutions.
We will wait to see how things develop, but this makes the perfect storm for a bull trap on the breakout of the ascending triangle and current resistance.
Paying particular notice to the OBV, which is based on the distinction between institutional investors and retail investors, the theory here is that as institutional investors will begin to buy into what retail investors have been selling.
The increase in volume should drive the price upward, at which point, larger investors begin to sell, trapping the bulls and making for a major switch in trajectory in the price away from resistance in a fresh phase of distribution.
Up, UP and away
On the other hand, a break of top side structure will lead to a continuation of the Aussie's remarkable resilience for 2020 so far.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD stays heavy under 0.6150 after China's inflation data
AUD/USD is deep in the red below 0.6150 in Thursday's Asian trading, reversing the previous recovery led by US President Trump's decision for an immediate 90-day tariff pause for many countries. However, escalaitng US-China trade war and Chinese disinflation remain a drag on the Aussie pair.
USD/JPY tumbles below 147.00, awaits US CPI for fresh impetus
USD/JPY has come under intense selling presure and drops below 147.00 in the Asian session on Thursday. The US-China trade war escalation and the divergent BoJ-Fed policy expectations underpin the Japanese Yen and weigh heavily on the pair amid a renewed US Dollar downtick. US CPI awaited.
Gold sticks to gains near $3,1000 amid escalating US-China trade tensions
Gold price extends the previous rebound to trade near $3,100 in the Asian session on Thursday. The safe-haven demand amid escalating trade tensions between the United States and China provides some support to the precious metal but the further upside appears elusive ahead of US CPI data.
Senate approves Paul Atkins as new SEC Chair
The Senate voted 52-44 on Wednesday to approve Paul Atkins as the new SEC Chair. The news could improve sentiment in the crypto market, considering Atkins has previously advocated for better crypto regulations and served as an advisor to crypto companies.
Tariff rollercoaster continues as China slapped with 104% levies
The reaction in currencies has not been as predictable. The clear winners so far remain the safe-haven Japanese yen and Swiss franc, no surprises there, while the euro has also emerged as a quasi-safe-haven given its high liquid status.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.