Chart: Is AUD/USD Ready for a Bearish Reversal?

AUD/USD is struggling to make new 2024 highs.

Does this mean Aussie traders are set for a bearish reversal?

Let’s take a closer look at the 4-hour time frame!

AUD/USD 4 Hour Forex Chart from TradingView

The US dollar lost ground against its major counterparts as more traders expect the Fed to cut interest rates (perhaps by as much as 50 bps) in September.

Despite this, the Australian dollar has been struggling in recent days to make new 2024 highs against the US dollar.

One possible reason is weaker-than-expected reports from China, fueling concerns about global growth and limiting demand for “risky” currencies such as the Aussie.

Remember that directional biases and market price volatility conditions are usually driven by fundamentals. Let’s say you haven’t done your US and Australian dollar homework yet, then it’s time to check the economic calendar and stay up to date with the daily fundamental news!

AUD/USD, which found resistance at the .6800 psychological handle, is forming what looks like a Head and Shoulders pattern on the 4-hour time frame.

Are we looking at a bearish reversal in the making?

A few more of those wicks and candlesticks below the 100 SMA and the .6700 psychological handle open AUD/USD to a move to the .6685 head and shoulders ‘neck’.

If this test of support results in consistent trading below the “neck”, we could even see a downside breakout that could take AUD/USD up to the previous .6630 area of ​​interest.

An extended rally for AUD/USD is not out of the question though. If the pair finds a catalyst and enough bullish momentum to break through the .6750 inflection point, the pair could head towards higher areas of interest such as .6800 or new 2024 highs.

Whatever bias you end up trading, make sure you use the best risk management moves and follow your trading plan so you can trade for another day regardless of how this setup turns out !