The pair of the Australian dollar with the US dollar (AUDUSD) at the end of February established the maximum of this year.
- large and small Head and Shoulders
- neck lines crossing each other create a strong support
The day when the pair reached 0.8000 establishing the maximum turned out to be a downward one and a bearish engulfing pattern appeared at the very top. This was a clear signal for declines. In March, the pair moved in a consolidation with a range of 220p. On the D1 chart we can see that a Head and Shoulders formation appeared, the red line marks the “neck” of this formation.
After overcoming the neck line, the declines turned out to be limited and the price returned above it again.
When we look at the H4 chart, we notice the H&S again, this time much smaller, its neckline is marked in green.
The intersection of the neckline of the large H&S and the smaller one (red and green lines) marks the support confluence point. If this level of 0.7700 is successfully overcome – it may be an impulse for dynamic declines.
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