AUD/USD Technical Analysis: Inverse head-and-shoulders breakout confirmed, trade tensions may cap gains

• For AUD/USD, the path of least resistance is on the higher side, technical charts indicate. The immediate gains, however, could be limited, courtesy of US-China trade tensions.

Daily chart

• As can be seen above, the spot closed at 0.7330 on Friday, confirming an inverse head-and-shoulders breakout. That only bolstered the already bullish setup, as indicated by the upside break of the falling trendline, confirmed on Nov. 11 and the ascending 5- and 10-day EMAs.  

4-hour chart

• The stacking order of the 50-candle SMA, above the 100-candle SMA, above the 200-candle SMA also indicates the AUD bulls have regained control.
• The spot could rise to 0.7600 (inverse head-and-shoulders breakout target) in the near-term. The bullish setup, however, could fail on escalating US-China trade tensions.

Trend: Bullish