AUD/USD At Resistance, Head and Shoulders Points to Weakness

Summary:

AUD/USD at resistance as a head and shoulders pattern points to more weakness. Aggresssive and conservative traders alike have something to trade here.

The AUD/USD pair is currently at horizontal resistance given by the right shoulder of a head and shoulders pattern. The market is resilient despite the recent weakness in U.S. stocks, especially in the tech sector.

While the Nasdaq 100 and other U.S. indices corrected yesterday, the move lower in the AUD/USD was reversed during the Asian session. What is interesting is that not even the weakness in the price of gold was able to bring down the pair. However, while at resistance, it attracts new selling interest.

Fed’s Powell is about to deliver a speech today, and the hopes are that the stock market will bounce on his words. However, the market is still close to all-time highs, and the likelihood is that the Fed will be conservative and spear its verbal intervention to address systemic risk, should it come in the future.

AUD/USD Technical Analysis

Both aggressive and conservative bears have something to trade here. Aggressive ones may want to go short at the market, place a stop at the highs, and target the measured move of the pattern. Moreover, they may want to add on the short side by the time the market breaks below the neckline. On the other hand, conservative traders may want to just wait for the support at the neckline to give way before going short.