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AUD/USD Double Top Pattern (April 3, 2014)
AUD/USD has formed a reversal pattern on its 1-hour time frame, indicating that the uptrend may be over and that a selloff is ready to take place. The pair is still testing the neckline around the .9225 level though before confirming the potential downtrend.
Stochastic is pointing down after moving from the overbought zone, indicating that Aussie bears are in control. This could lead to a break and a resulting 75-pip drop, which is the same height as the chart pattern. On the other hand, if the current level holds as support, another test of the previous tops might happen.
Shorting below .9225 with a 50-pip target and a tight 25-pip stop could work for a day trade. After all, Australia just released a weaker than expected retail sales reading and traders might start positioning for a good NFP reading.
By Kate Curtis from Trader's Way
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