AUDUSD → Bullish technical setup

OANDA:AUDUSD   Australian Dollar / U.S. Dollar
AUDUSD retreated on Wednesday, dragged down by the Fed’s hawkish monetary policy outlook, but continued to carve out a double bottom, a reversal technical formation typically symptomatic of a waning selling pressure that often precedes a sustained recovery in the underlying asset.

To elaborate further, a double bottom is a pattern characterized by two comparable troughs separated by a peak in the middle, normally observed within the context of a prolonged downtrend. Confirmation of this bullish configuration occurs when the price completes the "W" shape and breaches resistance at the neckline, marked by the intermediate crest.

Examining the daily chart presented below, neckline resistance can be seen in the 0.6500/0.6510 range. Successfully piloting above this ceiling could reinforce buying impetus, opening the door to a move to 0.6600.

Conversely, if sentiment shifts in favor of the bears and leads to a selloff, initial support is situated at 0.6360. While AUDUSD might find a foothold in this area during a pullback, a breakdown might precipitate an outsize slump, paving the way for a drop toward 0.6275, at which point the double bottom would be no longer valid.

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