AUD/USD maintains upside bias in bullish price pattern

<p>AUD/USD (daily chart) has formed a flag pattern within its two-month climb from extreme lows. Normally considered a trend continuation pattern, the flag formation is […]</p>

AUD/USD (daily chart) has formed a flag pattern within its two-month climb from extreme lows. Normally considered a trend continuation pattern, the flag formation is a small area of consolidation resembling an upright flag, which represents a resting point in the midst of a price advance. This bullish flag pattern has formed after the currency pair broke out above a major resistance area two weeks ago that included: the 200-day moving average, a key bearish trend line extending back to April 2013, and the neckline of a large inverted head-and-shoulders pattern.

That crucial breakout provided an indication of a potential bottoming out of the currency pair which, in turn, suggests further potential gains for AUD/USD. A breakout above the current flag formation points to a short-term upside target around 0.9400 resistance. Even further to the upside, the head-and-shoulders price target resides around the 0.9600 level. Key downside support for the pair currently resides around the broken head-and-shoulders neckline and the 200-day moving average.

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.