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Forex Strategy: AUD/USD Hammer Plays Out With Extended Gains

February 10, 2014

David de Ferranti

Talking Points

  • AUD/USD Technical Strategy: Piercing Line favors upside gains
  • An Evening Star pattern failed to get confirmation from a break below support
  • Bearish reversal candlestick formation with follow-through needed before offering a bearish bias

    The sharp move higher for the AUD/USD in recent trading arose following a Hammer candle formation on the 4 hour chart. The pair has now recovered by roughly 250 pips since the formation of a Piercing Line candle pattern near the 0.8700 handle.

    However, with sellers likely sitting around the psychologically significant US 90 cent level further gains may be limited. The presence of a bearish reversal candlestick close-by the key resistance level would likely present a short-term selling opportunity with a potential target of 0.8900.

    Forex_Strategy_AUDUSD_Hammer_Plays_Out_With_Extended_Gains_body_Picture_1.png, Forex Strategy: AUD/USD Hammer Plays Out With Extended Gains

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    Source: DailyFx

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