The rising channel on AUD/USD’s 1-hour forex chart is still holding and it appears the pair found resistance at the .9500 major psychological level, which lines up with the top of the channel. At the same time, stochastic is moving down from the overbought zone, indicating enough selling momentum to take the pair lower in the short-term.
If you’re willing to take a countertrend trade, you could still hop in a short position until the bottom of the channel at the .9400 handle. This setup might offer a limited reward though, as the move has already taken place.
On the other hand, if you’re bullish on this pair and would like to go on a long trade, you could wait for an actual test of the channel support at .9400 and aim for the .9500 levels for a profit target. This could offer a better return on risk if you set a tight stop below the channel and wait for stochastic to turn from the oversold area before setting orders.
By Kate Curtis from Trader’s Way