AUDUSD
The AUD/USD pair completed a head and shoulders pattern, and now the market participants focus on the measured move. Last Friday’s NFP report revealed a strong bounce of the US labor market and fueled a dollar rally.
The report came one day after the Fed’s Chair spoke at a virtual event hosted by the Wall Street Journal and did not indicate that the Fed is worried about the higher yields in the US. As a consequence, the dollar bounced across the board, and the AUD/USD pair reflects its strength as well.
Gold is down, too, breaking below $1,700 and putting pressure on the Aussie pair. Truth be said, the divergence between the price of gold and Aussie was strange to markets, as the two financial assets typically move in a tight correlation.
The neckline of a head and shoulders pattern is key. Once the price breaks it, it usually retest it before going for the measured move. The retest took place last Friday after the NFP report, and now bears have the chance to ride the move lower until the price reaches the measured move. Therefore, bears may want to remain on the short side with a stop at 0.7850 and a target at 0.7450.
