Morning Star candlestick pattern hints at Aussie Dollar upswing ahead. Any gains likely to be corrective within a longer-term downward trend. Opportunities to add to short trade sought if upside move materializes
The Australian Dollar put in a bullish Morning Star candlestick pattern after touching an 11-month low against its US counterpart, hinting a bounce may be ahead. Last week’s break of trend line support set form January 2016 makes for a broadly bearish bias, however, suggesting any gains from here are likely corrective.
Initial wedge floor support-turned-resistance is at 0.7573, with a break above that opening the door for a retest of the 0.7636-43 area (38.2% Fibonacci retracement, March 29 low). Alternatively, a daily close below the 50% level at 0.7482 paves the way for a challenge of the 61.8% Fib at 0.7327.
The short AUD/USD trade was activated at 0.7608 hit its initial objective at 0.7566 and profit has been booked on half of the position. The rest will remain in play, looking for downside continuation. An upswing will be treated as an opportunity scale up exposure if and when an opportunity to do so presents itself.