Is AUD/USD finally preparing to reverse higher?

aussie30The Aussiedollar weekly chart is another classic example of how patience can be richly rewarded following the extended congestion phase of March to August 2014 which saw the pair trade in an increasingly tighter range around the VPOC (volume point of control) in the 0.93 to 0.94 price area. This type of price action is always a signal of an explosive move once the breakaway occurs.

And as we can see clearly on the chart this phase of price action came to a dramatic end with a wide spread down candle which triggered the volatility indicator (the purple arrows top and bottom), as the price action moved outside the average true range in this time frame.

The price action to the downside was duly confirmed with a close well outside the volatility candle and further confirming the inherent weakness in the pair. Since last August the trend lower has also been perfectly confirmed and defined by the dynamic price pivots in a series of lower highs and lower lows with only a minor punctuation in March and April.

This minor reversal in fortune for the AUD/USD came to a halt with the failure to move through the 0.8160 resistance and provided the catalyst for a resumption of the downwards trend.

Since then AUD/USD has moved steadily lower before finding some much needed support in the 0.69 region from where it has attempted to rally.

What is also an interesting facet of this chart is the dramatic increase in trading volumes for the pair since the volatility candle of July 2014.

Aussiemonth30Moving forward the question now for AUD/USD is, given the extent of the fall (over 2400 pips), whether the pair has finally reached a bottom. And here it is the monthly chart which may give us a strong clue, particularly given the ultra high volumes of July and August 2015, and narrowing price spreads.