Australian Dollar is pretty well setup for another big move. The big question: Will it happen and when? The charts suggest soon.
Technically, Australian Dollar has formed a pattern called Bearish Pennant which seems to be a continuation pattern. You can see that pattern clearly on chart below.
Pennant is formed when there is a sharp price movement followed by generally sideways price movement, which can be flag or pennant. The flag is a rectangular shape, while the pennant looks more like a triangle. The pattern is complete when there is a price breakout in the same direction of the initial sharp price movement.
Here's the AUDUSD Daily Chart
As you can see in the chart above: AUD saw a big decline and then post decline has traded in sideways fashion and formed a triangle which can now break any time. Considering, the pattern looks like a pennant - trustworthy breakout will be on downside. If you add weekly chart to the analysis - there is something more interesting to look out for -
Here's the AUDUSD Weekly Chart
AUD is trading at yearly low which it made earlier in the year. A breakdown below 0.865 will not only be breakdown from pennant but also on weekly chart. It's time traders keep an eye for dramatic move on AUD.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers