AUD/USD Hammer Candle Signals Potential Bullish Reversal

By Tomasz Wisniewski|

Published: June 17 2024, 07:36 GMT+0

AUD/USD Hammer Candle Signals Potential Bullish Reversal

In today’s analysis, let’s focus on the Australian dollar (AUD) versus the American dollar (USD). The price is currently bouncing off a key horizontal support level. Observing the long-term H4 chart, since mid-May, the pair has been trading within a sideways trend marked by yellow lines, forming a rectangle. The price is now rebounding from the lower boundary of this rectangle.

Notably, a hammer candle is forming on the H4 chart, which is a promising bullish signal. Additionally, a week ago, the price briefly broke below the lower boundary but quickly returned inside the rectangle, indicating a false bearish breakout marked in orange. This false breakout generated strong bullish momentum, which pushed the price towards the upper boundary of the rectangle.

Now, with the price back at the lower boundary and the formation of a hammer candle, there is potential for a new bullish wave. This bullish scenario will be confirmed if the price sustains above the lower boundary. However, if the price falls below the yellow area and closes there today, it would signal a sell, negating the bullish setup. Traders should watch closely to see if this upswing will hold or if the bearish scenario will play out.