AUDUSD rises on Monday
03 April 2023
Monday brings us a bigger correction on the American Dollar, which in some cases is bringing us interesting trading occasions. One very promising can be spotted currently on the AUDUSD, where the price is creating two formations at once.
The first pattern is the flag (lower black and upper red), which is a trend continuation formation. Trend before establishing it was bearish, so the breakout should also happen to the downside. Monday’s training creates a situation where this scenario does not seem likely. Currently, the price is rising rapidly and testing the upper line of the flag. In case of a breakout of the red line, the whole flag concept would be cancelled.
Another pattern that we can spot on the chart is the pennant formation (black). Today’s rise managed to break the upper line of the pennant, which in consequence gives us a mid-term buy signal. Which one should be trust more, the pennant of the flag? Well, as for now, the pennant. If the price will additionally break the red line, we will trust both patterns simultaneously but in case of the flag we will consider the denial of this formation, which also can be a great trading signal itself.
Sentiment remains positive, as long as the price stays above the upper line of the triangle, comeback below would be considered as a cancellation of the buy signal, and breakout of the lower line of this formation would be considered as a signal to go short. Remember that tomorrow, at the end of the Asian session, RBA will decide about the interest rate in Australia, and the 25bp rise is expected. This and the statement will surely have a huge impact on this instrument.