One can see the potential head to shoulders formation forming in the weekly AUDUSD chart. The current doji candle shows a lot of uncertainty about the further direction. Of course, the shape of the candle may change by the end of today's session, but it currently suggests formation of a potential right arm. In theory, the formation will be confirmed once the pair breaks below the neck line, which is located around 0.7575 level. Should a break lower occur, downward move may accelerate towards 0.7155 level, which is not an important technical level when we look at the chart below.
Bulls are held back by resistance in the form of local highs from 2017 and a long-term downtrend line. It is also worth noting the sharp rebound from March last year, which is similar to the one from 2008-2011. The first phase and the second phase of growth were split by consolidation and a slightly deeper 6-month correction. It is possible that this situation could also materialize now. Nevertheless, the break below the aforementioned neckline will still be a confirmation of the downward formation. The bulls, in turn, will be watching further developments on the commodities market. Currently, the price of copper is rising very strongly and the breaking of recent local highs may set a positive tone for the Australian dollar.
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AUDUSD, interval W1. Source: xStation5
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