Bounces on Double Bottom, bullish reversal needs more filters

  • A double bottom formation is signaling a bullish reversal going forward.
  • Aussie bulls are attempting to balance above the 50-period EMA.
  • The RSI (14) is oscillating in a 40.00-60.00 range which signals a consolidation ahead.

The AUD/USD pair is going through a correction phase after facing barricades around 0.6920 in the New York session. The asset displayed some signs of reversal on Thursday after finding bids while testing two-week-old support at 0.6850.

Aussie bulls have displayed a Double Bottom formation after sensing lower selling pressure while attempting to violate June 14 low at 0.6850. The appearance of a light selling pressure while testing the prior crucial support results in a short-term bounce that demands more filters to turn into a bullish reversal. The trendline placed from June 16 high at 0.7070 will act as a major resistance for the counter.

The antipodean is attempting to sustain above the 50-period Exponential Moving Average (EMA) at 0.6896, which will strengthen the aussie bulls further. While the 200-period EMA at 0.6925 is higher than the asset, which clears that the long-term trend is still down.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals the consolidation phase ahead.

The aussie bulls could lift the asset price higher if the major overstep Wednesday’s high at 0.6965. This will drive the asset towards the psychological resistance at 0.7000, followed by June 13 high at 0.7035.

On the flip side, the aussie bulls could lose their grip if the asset drops below June 23 low at 0.6868. This will drag the asset towards May 12 low and the round-level support at 0.6829 and 0.6800, respectively.

AUD/USD hourly chart

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