I’m looking at another descending triangle on another dollar pair today!
This time I’ve got this AUD/USD setup ahead of the U.S. PPI and UoM consumer sentiment data.
Dollar traders are still playing it cool ahead of these top-tier reports that would likely influence Fed tightening plans, so I’m counting on bigger moves to happen once the numbers are out.
AUD/USD: 1-hour
For now, AUD/USD is stuck inside a consolidation pattern, forming lower highs and finding support around the .6520 area.
Price is bouncing off support while Stochastic is moving up, suggesting that another test of the triangle top might be in order. This lines up with the .6550 minor psychological mark and 100 SMA dynamic resistance, which might keep gains in check.
After all, the 100 SMA is below the 200 SMA to suggest that bearish vibes are present, so resistance is more likely to hold than to break.
Still, downbeat U.S. inflation reports might be enough to dash hopes of a September Fed hike, which could then translate to sharp losses for the dollar and a bullish AUD/USD breakout.
If that happens, the pair could climb by the same height as the triangle pattern or at least test the next upside barrier at the pivot point (.6610) near the .6600 major psychological mark.
On the other hand, strong U.S. CPI, PPI, and UoM consumer sentiment figures might revive FOMC tightening bets even past the September meeting, thereby spurring a strong dollar rally.
A break below the triangle support could lead a dip to S1 (.6470) then a drop that’s roughly the same height as the formation or a hundred pips.
Not sure which direction this one might go? A straddle strategy could work out, as long as you take the average AUD/USD daily volatility into account when setting entries and exits!
