- AUDUSD breaking above 0.65712 may send bullish signal
- Two potential targets identified
- If 0.65201 support is broken, bullish scenario becomes invalid
- Rising tops and bottoms should keep AUDUSD bulls in play, pending today's US CPI release
The bulls in AUDUSD currency pair on the D1 time frame might be on the war path and saddling their battle horses, ready to charge.
The first signs of this were when the MACD (Moving Average Convergence Divergence) revealed positive divergence between points “a” and “b” when comparing the bottoms at 0.65142 and 0.65628.
This could have alerted technical traders that the bulls might be ready to make a move.
This FX pair has been oscillating between daily support and resistance levels since 2 August, with neither the bulls nor the bears able to break to either side.
On 8 August the bears tried to break through the daily support level but could not manage and the bulls took over. They tried to reach the daily resistance level and after another bearish attempt to take control, a higher bottom formed on 9 August at 0.65201.
If the bulls can break through the last lower top that formed earlier in the session on 9 August at the 0.65712 price level, then two targets become possible from there.
Attaching a modified Fibonacci tool to the lower top at 0.65712 and dragging it to the lower bottom at 0.65201, the following targets can be established:
Potential Target #1: 0.66019
(located just before the daily resistance level to enable good risk management in case the price cannot break though that level)
Potential Target #2: 0.66836
(provided the price breaks through the first daily resistance and the bulls are able to reach the second daily resistance level.
If the support level at 0.65201 is broken, this scenario is no longer applicable.
As long as bulls can keep up the demand with rising tops and bottoms, the market sentiment for AUDUSD on the H4 time frame will remain bullish.
However, the upcoming US CPI data should have large sway over USD-pairs over the coming hours.