The AUD/USD pair is struggling to reach its 2024 highs.
Does this mean Australian traders are ready for a bearish reversal?
We take a closer look at the 4-hour time frame!
AUD/USD currency pair on 4-hour chart Chart by TradingView
The US dollar lost some ground against its major peers as more traders expected the Federal Reserve to cut interest rates (possibly by as much as 50 basis points) in September.
However, the Australian dollar has struggled to achieve new 2024 highs against the US dollar over the past few days.
Possible reasons include weaker-than-expected Chinese reports, which are fueling concerns about global growth and curbing demand for “riskier” currencies such as the Australian dollar.
Remember that directional biases and volatility in market prices are usually driven by fundamentals. Assuming you haven’t done your homework on the USD and AUD, it’s time to take a look at the economic calendar and stay up to date with the daily fundamental news!
The AUD/USD pair, which found resistance at the psychological level of .6800, is forming what looks like a head and shoulders pattern on the 4-hour time frame.
Are we witnessing a bearish reversal in the making?
More of those wicks and bearish candles below the 100 SMA and the 0.6700 psychological handle opens the door for AUD/USD to move towards the “neckline” of a head and shoulders at 0.6685.
If this support test leads to steady trading below the “neckline”, we could also see a bearish breakout that could take the AUD/USD pair to the previous area of interest at 0.6630.
However, an extended rally in the AUD/USD pair is not ruled out. If the pair finds enough upside momentum and motivation to break the 0.6750 turning point, the pair could head to higher areas of significance such as 0.6800 or new highs in 2024.
Whatever bias you end up trading with, make sure you use the best risk management moves and follow your trading plan so you can trade another day no matter how this setup turns out!
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