AUD/USD Bearish Impulse Tests Support of Daily Uptrend Channel

Dear traders,

the AUD/USD broke above the long-term resistance trend lines (dotted red) and confirmed both a higher low and higher high. Is a bullish reversal taking place or will the bears regain control?

Daily chart

The AUD/USD will be able to confirm the next direction depending on its reaction at the support line (blue) of the uptrend channel. A strong bullish bounce (green check) makes an uptrend likely whereas a bearish breakout would invalidate (red x) the current wave outlook.

4 hour chart

The AUD/USD made a deep retracement, which seems to have unfolded in an ABC (pink) zigzag pattern. A bearish breakout below the 100% FIbonacci level of wave 2 vs 1, however, invalidates (red x) the bullish wave pattern and indicates a downtrend. In that case, price made a bullish ABC rather then a 1-2 pattern. A bullish breakout, bounce, and continuation could make an uptrend more likely (green check).

Good trading,
Chris Svorcik

The analysis has been done with SWAT method (simple wave analysis and trading)
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This article was originally posted on FX Empire

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