AUD/USD – Price Consolidation Before Continued Upwards Price Movement

If we look at the daily chart of AUDUSD, we can see that on Thursday last week there was a bullish Kumo breakout, which also proceeded a morning star candlestick formation – both suggesting a further upward price movement. On Friday's session, we saw price retrace towards the Kumo where it should find strong support. Tenkan Sen, Kijun Sen and both Senkou Spans are upward sloping showing us that there is buying momentum behind the move. 

Looking at the 1-hour chart we can see that on the second from last hour of trading on Friday session the formation of a hammer candle close to the support, early indications of a possible reversal. We can see that at this price level the Kumo is very thin, suggesting a weak support level at this point. It is very likely that we will see the price break below the Kumo before we see any upward price action. Tenkan Sen, Kijun Sen and both Senkou Spans are flat – indicating to us no immediate price directional bias or momentum. Chikou Span is firmly within the price suggesting we are likely to see some price consolidation.