The Australian dollar (AUD) has developed an engulfing candlestick pattern that is nothing but bearish. This is a hint that the price may have topped below 0.78 figure against the USD once again. From as far back as august 2016, the prices have failed to overcome resistance, and a reversal lower will mark the second time that price failed to overcome resistance since then. With the AUD bearish and engulfing candlestick pattern, things seem to be to the advantage of the USD. This brings a lot of thought to mind considering that not so long ago, the USD was under duress as a result of the ongoing political activities in the United States at the time. The expectation of many were cut short and a lot of USD investors were at hold, hinting that they are not sure of what will become of the US economy. However, there are two sides to every coin. Even though the USD was becoming bearish at the time, there is no saying that the currencies it is paired with are performing fine.
Still on the AUD USD technical analysis, the near term support got to 0.7659, which is the 14% fibonacci expansion. This came with a break below that at every point of closure on a daily basis. As a result of this break, the daily closure basis opened the door for a test of 23.6% level at 0.7604. With the support at 0.7659, a push above double top resistance at 0.7760 paves way for a test of the April 2016 high at 0.7835. From what is going on so far, the prices are too close to the near-term support. This means that one cannot really justify entering a short trade from a risky or rewarding perspective. With what is going on, there is need for a bounce or a confirmed breach or near term support for a way to be paved for an actionable entry opportunity. The best thing to do for the meantime is opting for the side lines.
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