Advertisement
New Zealand markets closed
  • NZX 50

    11,946.43
    +143.15 (+1.21%)
     
  • NZD/USD

    0.5938
    +0.0003 (+0.05%)
     
  • ALL ORDS

    7,937.50
    -0.40 (-0.01%)
     
  • OIL

    82.99
    -0.37 (-0.44%)
     
  • GOLD

    2,325.80
    -16.30 (-0.70%)
     

AUD/USD Correction Looms Following Bearish Engulfing Pattern

Talking Points

  • AUD/USD Technical Strategy: Shorts Preferred

  • Bearish Engulfing pattern on the daily offers warning

  • Key resistance remains at 0.9440, support at 0.9330

A Bearish Engulfing candlestick pattern on the AUD/USD daily chart has superseded a Shooting Star formation and offers a warning signal for declines in the pair. 0.9440 continues to offer notable resistance, while a pullback is likely to be met by buying support at the psychologically-significant 0.9300 handle. At first glance, the setup appears promising for shorts, however traders should be mindful that the uptrend remains intact and a similar signal back in April failed to elicit a bearish reaction.

AUD/USD: Bearish Engulfing Pattern Offers Reversal Signal

AUDUSD-Correction-Looms-Following-Bearish-Engulfing-Pattern_body_Picture_2.png, AUD/USD Correction Looms Following Bearish Engulfing Pattern
AUDUSD-Correction-Looms-Following-Bearish-Engulfing-Pattern_body_Picture_2.png, AUD/USD Correction Looms Following Bearish Engulfing Pattern

Daily Chart - Created Using FXCM Marketscope 2.0

ADVERTISEMENT

A look at the four hour chart gives us a conflicting signal with a Bullish Engulfing pattern hinting at an intraday bounce. However, the formation has yet to receive confirmation from a successive up-period, and may face a limited response given the context provided by the daily.

AUD/USD: Bullish Engulfing Pattern Suggests Strong Support at 0.9330

AUDUSD-Correction-Looms-Following-Bearish-Engulfing-Pattern_body_Picture_1.png, AUD/USD Correction Looms Following Bearish Engulfing Pattern
AUDUSD-Correction-Looms-Following-Bearish-Engulfing-Pattern_body_Picture_1.png, AUD/USD Correction Looms Following Bearish Engulfing Pattern

4 Hour Chart - Created Using FXCM Marketscope 2.0

By David de Ferranti, Market Analyst, FXCM

Follow David on Twitter: @Davidde

To receive David’s analysis directly via email, please sign up here

Learn how to read candlesticks to help identify trading opportunities with the DailyFX Candlesticks Video Course.


original source

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.