AUDUSD is moving in box pattern and market has rebounded from the support area of the pattern
The AUD/USD currency pair is currently in a sideways trend, which has persisted since mid-May. While the pair is experiencing some resistance, there is potential for an upward movement. Let’s dive into the details of what’s happening with AUD/USD and what traders can expect.
Understanding the Current Trend
The AUD/USD pair has been oscillating within a range, creating a sideways trend. This type of movement means the pair isn’t showing a clear directional trend but is instead fluctuating between established highs and lows. The phrase “the trend is your friend” suggests that the current pattern is likely to continue for some time.
Currently, AUD/USD is bouncing off the lower end of its range, hinting at the possibility of an upward move towards the range’s ceiling, around 0.6709. This pattern of bouncing between support and resistance levels is common in sideways trends.
Challenges and Potential Breakouts
Facing Resistance
One significant challenge for AUD/USD is the resistance from several major Simple Moving Averages (SMAs) on the 4-hour timeframe. Specifically, the 50, 100, and 200 SMAs are creating a barrier that the price needs to overcome. Despite this obstacle, there’s a possibility that the price will eventually break through this cluster of resistance.
AUDUSD is moving in Ascending channel and market has fallen from the higher high area of the channel
A key level to watch is 0.6640. If AUD/USD closes above this level, it would signal further upside potential, possibly reaching the upper boundary of the range. This move could indicate a shift towards a more directional trend.
The Possibility of a Breakout
For AUD/USD to transition from its current sideways trend to a more directional trend, a decisive breakout of the range is necessary. An upside breakout is slightly more probable due to the bullish trend that preceded the current range formation. If a breakout occurs, it is likely to be accompanied by increased volatility because the range highs and lows have been repeatedly tested.
What a Breakout Means
A breakout can happen in two directions:
Upside Breakout
An upside breakout would be confirmed by a longer-than-average candle closing above the range or three consecutive candles of the same color breaking through the range top. This move could lead AUD/USD to a target of around 0.6770. This target is derived from the height of the range and using the Fibonacci 0.618 ratio for projection.
Downside Breakout
Conversely, a downside breakout would be indicated by a similar pattern, with candles closing below the range floor. This move could push the pair towards an initial target of around 0.6521.
Key Takeaways for Traders
Watch the Key Levels
Traders should keep an eye on the key resistance levels formed by the 50, 100, and 200 SMAs. A close above 0.6640 would be a strong signal for further upside movement.
Prepare for Volatility
If a breakout occurs, be prepared for increased volatility. The repeated testing of range boundaries suggests that any breakout will likely be significant.
AUDUSD is moving in Descending channel and market has rebounded from the lower low area of the channel
Stay Informed
Keep monitoring the market for signs of a decisive breakout. Whether it’s an upside or downside move, being aware of the breakout patterns will help you make informed trading decisions.
Final Summary
The AUD/USD pair is currently in a sideways trend, facing resistance from several major SMAs. While there’s potential for an upward move, a decisive breakout is needed to signal a change to a more directional trend. Traders should watch for key levels and be prepared for potential volatility in the event of a breakout. Staying informed and monitoring market patterns will be crucial for navigating the current trend in AUD/USD.
Don’t trade all the time, trade forex only at the confirmed trade setups
Get more confirmed trade signals at premium or supreme – Click here to get more signals , 2200%, 800% growth in Real Live USD trading account of our users – click here to see , or If you want to get FREE Trial signals, You can Join FREE Signals Now!
