H1 bearish flag pattern forming

4 мая 2020 г.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery.

The recovery move, alongside April’s 370-pip advance, landed the unit within striking distance of supply fixed at 0.7029/0.6664, intersecting with a long-term trendline resistance (1.0582).

With reference to the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis -

Supply from 0.6618/0.6544 remains a dominant feature in this market. It should also be emphasised this area comes with a 127.2% Fib ext. level at 0.6578 and a nearby 161.8% Fib ext. level at 0.6642.

Thursday, as you can see, fashioned a bearish rotation candle out of the current supply, snapping a six-day winning streak, with Friday extending losses by nearly 100 pips. Monday, on the other hand, failed to follow-through, producing a Japanese hammer candlestick pattern off lows at 0.6372, regarded as a bullish reversal signal.

April 21 low at 0.6253 is seen as the next possible support band on this chart; breaking lower, nonetheless, shows demand at 0.5926/0.6062 may come under attack.

H4 timeframe:

Partially altered from previous analysis -

The harmonic Gartley formation, boasting a defining limit at the 78.6% Fib level from 0.6433, remains a focal point on the H4 timeframe. At the tail end of the week, fuelled (technically) on the back of selling from the current daily supply, price action leapt beneath H4 demand at 0.6432/0.6462.

Demand at 0.6356/0.6384 held firm in recent action, leading to a retest at the underside of 0.6432/0.6462.

Overall, the said harmonic pattern is still in motion and remains valid until breaking the X point at 0.6684.

H1 timeframe:

Despite early movement tunnelling through 0.64, price staged a modest intraday recovery off session lows at 0.6372 and formed what appears to be a bearish flag pattern, a popular formation to determine trend continuation that typically offers attractive risk/reward. Another constructive development is the H1 candles are seen grinding the underside of a trendline resistance (0.6253).

Structures of Interest:

Monthly supply at 0.7029/0.6664 remains a point of interest to the upside, though in order to reach this far north traders must first contend with the noted daily resistances.

With respect to short-term movement, should we break the lower edge of the current H1 bearish flag pattern, preferably engulfing 0.64 in the process as well, this could offer lucrative risk/reward on moves lower. The take-profit is generally measured by way of the preceding move (large black arrow) and added to the pattern’s breakout point. Protective stop-loss orders tend to be positioned above the upper boundary of the flag pattern.