The Australian dollar has registered a significant increase after the RBA's decision to hold the interest rate steady at 0.75% in yesterday's meeting. AUD/USD has bounced back from the 0.6689 - 0.6676 support area and now it looks ready to reach new highs in the short term.
The pair is trading within a descending channel on the H4 chart, so the first upside target could be at the downtrend line. Only a valid breakout from this pattern will really confirm a broader upside movement.
In this material, I want to talk about the reason why I believe that AUD/USD could jump much higher in the nearest days. You can notice that I've drawn a major ascending pitchfork to catch a potential upside movement after the failure to break through the support area.
AUD/USD has tested and retested the lower median line (LML) of the ascending pitchfork, validating this line as the important dynamic support, while the false breakdown below it has indicated some strong buyers. The price has broken above the Pivot Point, 0.6728, it should climb towards the channel's resistance and towards the R1 level (0.6775) if it stays above this broken static resistance.
- Trading Recommendations
We don't have a good buying opportunity at this moment, we had one after the false breakdown below the lower median line (LML). The bias is still bearish on the H4 chart as long as the rate is trapped inside the down channel, that's why you should wait for a valid breakout from this pattern before you'll decide to go long on this pair.
A valid breakout could signal a potential increase towards the R2 (0.6864) and towards the median line (ML) of the major ascending pitchfork. The potential upside movement could be invalidated by a failure to reach the downtrend line or by a rejection (false breakout) from this resistance. You should know that an important drop will be confirmed only after a valid breakdown below the LML and below the 0.6676 low.
