AUD/USD Price Analysis: Pulling back within a short-term uptrend

AUD/USD is correcting back within a short-term uptrend.
It will probably eventually find support and resume its bullish bias.
The pair may have formed a Measured Move with a target for ending wave at 0.6680.

Joaquin Monfort FXStreet

AUD/USD is trading in the 0.6590s on Tuesday as it continues correcting back from its May 3 high above 0.6600.

The pull back is probably only a temporary correction. The rising sequence of peaks and troughs on the 4-hour chart suggest the pair is in a short-term uptrend, which given the old adage that “the trend is your friend”, is biased to eventually continue higher.

AUD/USD 4-hour Chart

The Moving Average Convergence Divergence (MACD) momentum indicator has crossed below its signal line indicating AUD/USD will probably continue lower for a bit longer.

The correction could unfold down to support in the rectangular pale green zone drawn on the chart just above the lower trendline. From there price will probably resume its uptrend. A break below the trendline, would be a bearish sign, suggesting a potential reversal.

If the uptrend resumes it will probably rise back up to the 0.6649 resistance level of the May 3 high, then a target at around 0.6680.

AUD/USD has probably formed a Measured Move price pattern since the April 19 lows. These patterns are like large zig-zags composed of three waves. These are labeled A, B and C on the chart. The general expectation is that wave C will be either the same length as A or a Fibonacci 0.681 of A.

Wave C has already reached the Fibonacci 0.681 target of the Measured Move at the May 3 highs, however, there is a chance it could go all the way to the second target where C=A at 0.6680.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

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