Economic releases of a few hours ago seem to be giving direction to this pair which has suffered directionless for several days. The inflation measure is slowing down every period, with the current reading at 1.00%, disappointing expectations. Bearish sentiment has taken over, with price repeatedly testing the diagonal trend line established for a few weeks now.
It is a common red flag when price keeps hitting lower highs and retesting a support area, meaning it will eventually break as history has shown in the majority of cases. If the pattern goes as expected, AUD/USD is set to touch SMA 200, which coincides with the other diagonal trend lines.
AUD/USD Daily Chart - July 27, 2016
On a shorter time frame a head and shoulders is visible, and it seems like it is in the last stages of forming its right shoulder. MACD on the same side supports the bearish case, however given that it is a lagging indicator, we cannot base our position on that indicator as it will most likely turn entirely bearish once AUD/USD has broken the neckline.
Thus, the safest way to play this pattern is shorting at 0.75 with stop loss at 0.7565 and profit target at 0.735 initially and then lower towards 0.73. In the event that 0.746 breaks, we will enter short market order.
AUD/USD 4H Chart - July 27, 2016