AUD/USD hints at a forming negative pattern. - technical analysis - 16-12-2015.

AUD/USD rose in the short term, following a bounce off the crucial support level of 0.7171, which represents the neck line for a tentatively-forming technical pattern, which is the head and shoulders as shown in the attached chart. It is a forming pattern due to the existence of two shoulders in the right side of the pattern, but it remains to be seen as long as the support of 0.7171 holds one, along with the continuance of the negative pressure from the simple moving average for the period 50.

 

Therefore we think it's likely the pair will decline, but only if the pattern does complete its formation successfully by breaching the support of 0.7171, targeting thereafter the support of 0.7115 as the first line of defense to meet it.