Good day traders!

Lets look at the chart below.

aussie chart analysis

australian dollar currency analysis

Analysing the AUDUSD chart on the 4 hour chart, I can see a head and shoulders pattern. The price is now testing the neckline at 0.906.  Stochastic is now at overbought levels but has not given any signs that the bullish move is about to end.

The MACD histogram is also showing bullish momentum.

At this juncture, the bears would come in to short this pair, anticipating a reversal as the pair hits the resistance level at 0.906 which also looks to be the neckline of an inverse head and shoulders.

Taking a short trade here is the less riskier option as the price has also touched the R3 pivot level. Usually at that level, bears would come in and try to seize control.

The price is also near its 61.8% fibo level taking from the top at 0.9224 and the low at 0.8773.

Conclusion

With 3 levels of confluence available for a short position. It would be a good short term trade to take on the short.  Stop loss at 0.912 and limit at R2, 0.9012.

Update on the AUD/USD on 1st September 2010 10.57pm (Singapore Time)

AUD?USD Chart analysis update on September 2010

AUD/USD Chart analysis update on September 2010

AUD/Bullish momentum has seen it breaking pass its primary resistance at 0.9065. It is now met with resistance from an upward sloping trend line and round figure at 0.91. We need to see how the next 4 hour bar closes to give us some guidance on whether a correction downwards will occur. At the moment, there is no indication for a short trade yet after the breakout above 0.9065. Wait for the price to close below that level before taking a short trade. To take a long trade now can be risky as the trend line acting as resistance might prevent further up moves.

A short trade taken earlier might have given traders about 20 pips profit, as the price bounced off from 0.9065 level, back to 0.9048 level.

Till then, happy trading!

~ Ardy

Singapore Forex Blog