AUD/USD Price Action: Bulls look for H&S neckline to hold, target break of 50% Fibo

• AUD/USD bears taking back control on the short-term outlook, testing H&S neckline. 
• The bullish bias remains while above neckline and within rising channel, with OBV in favour of the rising channel. 
• Bulls need to clear a 36.25 fibo confluence resistance and then a 50% mean reversion.

AUD/USD daily chart

Following a sell-off of a five-wave break to the upside within the rising channel established in October 2019, from which AUD/USD rallied from a low in the 0.6670s to a high in the 0.7040s, bulls are back in the picture, battling for territory vs a fresh wave of supply.

The price of the Aussie has consolidated in the right shoulder of an H&S pattern within a rising bullish channel. The neckline has held an initial test ahead of key Aussie data this week and while the bears are looking for a good lunch on a disappointment there, the technical picture is still skewed in favour of the bulls, at this juncture at least. 

The On Balance Volume is with the bull trend. However, in more recent trade, we now have a bearish engulfing in development on the 4hr charts with the price submerged below the 50-day moving average 21 4-hour ma.

Nevertheless, should the neckline hold, bulls will be encouraged to push the bears back to a test of the prior resistance and a 38.2% Fibonacci retracement of the prior swing high (head of H&S). A subsequent break of a 50% mean-reversion target could lead to a grind higher towards the top of the rising channel again. But it will be a bumpy ride and stops should be positioned accordingly, using ATR as a reference point. 

On the flip side, on a break below the neckline, a clear-out of stops will be the first test of the market's appetite. A continuation to the downside, however, will likely encourage a downside bias below the rising channel (depending on fundamentals) with a focus on the 61.8% Fibo retracement of the entire channel.