Technical Analysis – AUDUSD sinks after posting double top pattern
August 8, 2023 2:27 pm
AUDUSD has fallen sharply in recent weeks, after posting a double top near the 0.6900 region. The neckline of the double top pattern at 0.6600 was soon violated and then acted as resistance for the price action, painting a negative outlook for the pair and signaling the resumption of the longer-term downtrend that started in 2021.
In fact, the downtrend seems to be intensifying as the slope of the trendlines connecting the pair’s highs is becoming steeper. The downtrend line connecting the highs of 2023 is more vertical than the one connecting the highs since 2021. With the pair also trading near its lower Bollinger band while momentum oscillators like the RSI and MACD flash bearish readings, there isn’t much to be optimistic about.
If sellers remain in control, their next target might be the 0.6460 zone, which halted the selloff back in late May. A potential break lower would likely add fuel to the bearish momentum, turning the spotlight towards 0.6390 next. Even lower, the November trough of 0.6270 could come into play.
Now in case buyers mount an offensive, the first major barrier to the upside would probably be the 0.6600 neckline. If they manage to pierce above it, the focus would turn to the 0.6820 territory, which roughly encapsulates the 50- and 200-day moving averages (MAs) as well.
In short, the technical picture is overwhelmingly bearish after the double top formation and a break below 0.6460 could reinforce selling pressures. Buyers need a swift break back above 0.6600 to stay in the game.
AUDUSD has fallen sharply in recent weeks, after posting a double top near the 0.6900 region. The neckline of the double top pattern at 0.6600 was soon violated and then acted as resistance for the price action, painting a negative outlook for the pair and signaling the resumption of the longer-term downtrend that started in 2021.
In fact, the downtrend seems to be intensifying as the slope of the trendlines connecting the pair’s highs is becoming steeper. The downtrend line connecting the highs of 2023 is more vertical than the one connecting the highs since 2021. With the pair also trading near its lower Bollinger band while momentum oscillators like the RSI and MACD flash bearish readings, there isn’t much to be optimistic about.
If sellers remain in control, their next target might be the 0.6460 zone, which halted the selloff back in late May. A potential break lower would likely add fuel to the bearish momentum, turning the spotlight towards 0.6390 next. Even lower, the November trough of 0.6270 could come into play.
Now in case buyers mount an offensive, the first major barrier to the upside would probably be the 0.6600 neckline. If they manage to pierce above it, the focus would turn to the 0.6820 territory, which roughly encapsulates the 50- and 200-day moving averages (MAs) as well.
In short, the technical picture is overwhelmingly bearish after the double top formation and a break below 0.6460 could reinforce selling pressures. Buyers need a swift break back above 0.6600 to stay in the game.
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