We’re looking for a leg of a contracting triangle
The above chart is the AUDUSD pair on the daily time frame and it represents an interesting pattern in the sense that we’re looking for a leg of a contracting triangle, the b wave in green, that should end way much higher the current level.
In reality, it only started 20 days ago and if you want the pattern resembles with an inversed head and shoulders pattern as well.
Today being Friday at the end of an extremely volatile week, the AUDUSD pair should stretch higher as all week it was affected by flows out of/in to the cross (EURAUD). Most likely traders will book profits on the cross today so flows should be favorable to the AUDUSD pair.
One key factor here is going to be the USDCAD pair as the way it moved lately strongly influenced the aussie pair, but the USDCAD is forming a triangle on the hourly chart that should resume lower.
If that is going to happen today, then the AUDUSD pair should fly in consequence.
No important economic releases today so all eyes will be on end of week flows and profit taking.
How to trade
The idea is to buy call options for today’s expiry at 21:00 GMT from current 0.7100 level and if we manage to see a move above 0.7146 today, that would be a great place for a put option with the same expiration date.