The AUDUSD started to pull away after a very strong rally which can be partially attributed by a US Federal Reserve which came out to be much more dovish than US Dollar bulls needed them to be and the powerful rally which was additionally met by short-covering turned its former resistance area into its next support area which is visible in the above chart in light blue. After testing its new support level the AUDUSD continued its rally until the Bollinger Band indicator flattened out which decreased upward momentum.
After a false breakout above the top band of the Bollinger Band indicator the AUDUSD started a gradual reversal of the rally, but the counter-trend move remained contained inside of its Bollinger Bands. A series of lower highs and lower lows allowed for an increase in downward momentum as an ascending resistance level as well as an ascending support level were formed, but give the wider base they were not enough to resemble a bearish price channel and are now forming a wide falling wedge formation.
An ascending support level has also formed which is expected to encourage bulls to once again rally the AUDUSD into its resistance are which is visible in grey in the above chart. Forex traders are advised to seek out long positons at 0.7790 and below. A take profit target of 0.7935 has been selected for a potential trading profit of 145 pips on the H1 Chart. Any breakdown below the ascending support level, as long as price action remains above 0.7760, should be taken advantage of.
Forex traders should protect this trade with a stop loss level at 0.7730 for a potential trading loss of 60 pips which will result in a Risk-Reward (RR) ratio of 2.42.
Long @ 0.7790
TP @ 0.7935
SL @ 0.7730