FX.co ★ AUD/USD Oversold Condition is Evident!

AUD/USD is trading at 0.6985 level and maintains a bullish bias, but the false breakout above 0.7000 and the bearish engulfing has signaled that the pair is under pressure in the short term.

The latest upbeat US data has pushed AUD/USD lower again in the short. It remains to see what will happen today after the US publishes the Prelim UoM Consumer Sentiment, the Housing Starts, and the Building Permits figures. Better than expected data will boost the USD, which could take full control against the Aussie.

AUD/USD has failed once again to come back towards the median line (ML) of the ascending pitchfork. It is trapped between the lower median line (lml) and the 50% Fibonacci line of the red ascending pitchfork, a valid breakdown from this pattern will suggest selling.

I believe that only a false breakdown with huge separation, pin bar, below the 0.6976 and below the lower median line (lml) will bring a strong upside momentum, otherwise, continuous pressure on the lower median line (lml) could finally lead to a breakdown and to a bearish movement.

RSI is signaling a bearish divergence, but this signal is not enough for us to open a bearish position.

• AUD/USD Trading Tips

A valid breakdown below the lower median line (lml) of the red ascending pitchfork will represent a short signal, the 0.6799 could be used as a downside target. The bias is still bullish now as the rate is traded within the ascending pitchfork's body. A drop below the 0.6963 low could activate the bearish movement.

Buy a false breakdown with a huge separation below the lower median line (lml) or another higher high and a valid breakout above the 0.7064 level.