An interesting technical development is unfolding on the Australian Dollar to US Dollar (AUD/USD) pair, where price action has carved out a triple top formation, signaling a potential reversal. The pattern, clearly visible on the chart, is marked by three peaks around the same price level—outlined with blue rectangles—and suggests that buyers are struggling to push the price higher.
What's particularly significant is the location of this formation. It’s occurring right at a crucial horizontal resistance at 0.639, marked with yellow. This level has acted as a formidable barrier over the past several weeks, and each attempt to break above it has been met with strong selling pressure.
Today, we are witnessing a breakdown of the neckline of this triple top, which is marked with an orange line. The neckline break is typically viewed as a confirmation of the bearish pattern, and in this case, it’s triggering a technical sell signal.
It’s worth noting that this setup is counter-trend in nature, meaning we’re trading against the broader bullish trend that had been developing earlier. That inherently lowers the probability of success, but also improves the risk-to-reward ratio—a trade-off some traders might find appealing.
Trading Strategy:
As long as the price stays below the 0.639 resistance, sentiment remains bearish. The triple top breakdown is in play, and sellers could look to target lower support zones. However, if the price manages to reclaim the yellow resistance and closes a day above it, the pattern would be invalidated, flipping sentiment back to bullish and potentially opening the door to another leg higher.