- AUD / USD is struggling to gain traction and remains trapped within a range above 0.7750.
- Repeated failures near the 0.7815-20 area constitute the formation of a bearish pattern of multiple highs.
- The bears could still wait for a sustained break below the 0.7700 level before opening new positions.
The AUD / USD pair lacks a firm directional bias and remains trapped within a narrow trading range, above the 0.7750 region, during the first half of the European session on Friday.
The US dollar has built on the modest rebound the day before, from lows of more than two months, and has strengthened somewhat for the second day in a row on Friday. A softer risk tone has been seen as a key factor that has benefited the USD as a safe haven and limited gains from the higher perceived risk AUD.
From a technical perspective, the repeated failures near the 0.7815-20 hurdle now appear to constitute the formation of a bearish pattern of multiple highs on the short-term charts. However, the reversal pattern is not complete until key support near the round 0.7700 level is broken.
Meanwhile, technical indicators on the daily chart remain in bullish territory, but have been struggling to gain significant traction. Also, this makes it prudent to wait for a sustained move in either direction before positioning for a firm short-term move.
A convincing break below the 0.7700 level will confirm the breakout and accelerate the decline towards 0.7660. Some subsequent selling should pave the way for additional weakness and have the potential to drag the AUD / USD pair towards the round 0.7600 level.
On the other hand, the 0.7800 level now appears to act as an immediate hurdle ahead of the key 0.7815-20 barrier. A convincing breakout will negate the negative outlook and set the stage for a move towards the March monthly highs around 0.7850.
Some subsequent purchases will turn the bias in favor of the bulls and pave the way for additional gains. The AUD / USD pair could then aim to rebound to the 0.7900 level before launching towards the 0.7965-70 region on its way to the key psychological level of 0.8000.
AUD / USD 4-hour chart
AUD / USD technical levels
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