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AUD/USD Price Analysis: Australian Dollar Hits Tough Medium-Term Resistance at 0.6650

  • AUD/USD has risen to tough resistance and stalled.
  • It must decisively break above this barrier to continue the short-term uptrend.
  • A successful breakout could lead to a move to the end of wave C of a measured moving price pattern.

AUD/USD has reached key long-term resistance around 0.6650 and has stalled.

AUD/USD 4-hour chart

However, the pair is likely to be in a short-term uptrend, as demonstrated by the ascending sequence of highs and lows since the April 19 low. Taking into account the old saying that “the trend is your friend”, this means that the odds favor AUD/USD.

However, AUD/USD needs to break decisively above the 0.6650 resistance to continue the uptrend.

A decisive breakout is one that is accompanied by a long candlestick that breaks and closes near its high or three green candlesticks in a row that break above the level.

If AUD/USD manages to break above the resistance level, it will likely rally towards the May 8 high at 0.6667. A break above this level would be very bullish and would lead to a bullish move towards a target around 0.6690. This last target is generated by a possible measured movement pattern that AUD/USD has formed since the April 19 lows.

The measured moves are large zig-zag patterns composed of three waves, typically labeled A, B, and C. The general expectation is that wave C will have the same length as wave A or a Fibonacci ratio of 0.681% of wave A. Wave C has already reached the Fibonacci ratio of 0.681% of A and wave C has already reached the Fibonacci ratio.

Wave C has already reached the 0.681% Fibonacci ratio target when it rose to the May 3 highs, however, it could also reach the target where C=A at 0.6690.

On the other hand, a decisive break below the red trend line would be a bearish signal and could denote a short-term trend change.

Source: Fx Street

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