Cup and Handle Pattern Forms

The AUD/USD pair will likely resume the bullish trend as buyers target the key resistance level at 0.6894.

• Buy the AUD/USD pair and set a take-profit at 0.6900.
• Add a stop-loss at 0.6750.
• Timeline: 1-2 days.

• Set a sell-stop at 0.6800 and a take-profit at 0.6700.
• Add a stop-loss at 0.6900.

The AUD/USD price retreated on Monday as last week’s rally eased. After soaring to a high of 0.6894 on Friday last week, the pair retreated to a low of 0.6787. In all, the pair has jumped by more than 3.40% from the lowest point this month.

The AUD/USD exchange rate dropped on Monday after the latest Chinese economic numbers. Data published by the National Bureau of Statistics (NBS) showed that the economy expanded by 6.3% in the second quarter, lower than the median estimate of 7.3%.

The country’s retail sales rose by just 3.1% in June while the youth unemployment rate jumped to a record high. These numbers mean that the Chinese economy is losing steam even as the reopening continues.

Chinese economic numbers are important for the Australian economy because of the volume of trade between the two countries.

The pair also retreated on Tuesday after the Reserve Bank of Australia (RBA) published minutes of the past meeting. In the past meeting, the bank decided to leave interest rates unchanged at 4.1%.

The minutes showed that the committee believes that Australia’s inflation has peaked. As such, the bank expects that it will leave interest rates unchanged in the coming months.

The next important AUD/USD news to watch will be the upcoming US retail sales numbers. Economists expect the data to show that the headline consumer inflation jumped from 0.3% in May to 0.5% in June. On a year-on-year basis, they expect the numbers to show that retail sales rose by 1.6%.

The AUD/USD exchange rate retreated on Monday. This pullback happened after the pair reached a high of 0.6894, the highest point on June 16th. The pair has formed a cup and handle pattern, which is a sign of a bullish continuation. This pullback is part of the handle section.

The pair has moved above the 25-period and 50-period moving averages. Most importantly, it has formed a bullish engulfing pattern. It has also risen above the Ichimoku cloud. Therefore, the pair will likely resume the bullish trend as buyers target the key resistance level at 0.6894. The stop-loss of this trade is at 0.6750.

Ready to trade our free Forex signals? Here are the best forex platform Australia to choose from.