H4 bullish flag in process

10 thg 5, 2020

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery.

April’s 370-pip advance has, as you can see, landed May within striking distance of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

Regarding the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis -

Thanks to a modest end-of-week advance, daily price faces supply from 0.6618/0.6544. It should also be emphasised this area comes with a 127.2% Fib ext. level at 0.6578 and a nearby 161.8% Fib ext. level at 0.6642. Traders will also likely include the 200-day simple moving average (SMA) at 0.6672.

The fact we failed to print fresh lows from the recent test of the current supply, as well as the series of higher highs/lows formed since testing 0.5506, may fuel buyers.

H4 timeframe:

Thursday witnessed the final leg of a double-bottom scenario form out of demand at 0.6356/0.6384, with action confirming the pattern by breaking through Tuesday’s high at 0.6476 (red arrow). Traders long the breakout will be looking for price to reach 0.6578. Traditionally, take-profit targets for double-bottom patterns are established by measuring the lowest trough within the formation to the peak and adding the value to the breakout point (green).

Buyers likely moved protective stop-loss orders to breakeven ahead of the close Friday. Most, nevertheless, will have held on to their positions over the weekend on the basis we’re also forming what appears to be a bullish flag (0.6547/0.6507). This is generally viewed as a continuation pattern.

H1 timeframe:

Demand at 0.6494/0.6511 made its debut Friday, an area holding the 0.65 handle within. To the upside, 0.6550 may prove troublesome for buyers. However, a break likely seals a H4 close above the H4 bullish flag pattern, potentially triggering a run to H1 supply priced in at 0.6613/0.6578.

Structures of Interest:

Long term:

Monthly price shows room to approach supply at 0.7029/0.6664. In order to reach this far north, daily price must engulf its current supply from 0.6618/0.6544.

Short term:

Intraday traders likely have eyes on moves above 0.6550 today. This will be particularly interesting to breakout buyers, given the H4 bullish flag in motion.