ICmarkets

AUD/USD Possible drop in price to be seen down to the 4hr demand

FX:AUDUSD   Australian Dollar/U.S. Dollar
111 0 0
4hr TF.

The higher-timeframe picture resembles the following:

• The weekly timeframe is still depicting consolidating price action with the upper limits being seen at 0.94600 and the lower at 0.92046.

• Buyers and sellers have been trading within a small range on the daily timeframe , daily supply being seen above at 0.95425-0.94852 and a low below at 0.93208. Once we see a break of either of these areas, we will likely have more idea on possible short-term direction.

At this point in time, price remains capped by the round number 0.94000 and 4hr demand below at 0.93208-0.93417. It was expected that price may decline as far as the 0.93348-0.93500 area, as we can all see this has yet to happen. Temporary 4hr support has formed at 0.93598 which pushed price up to the round number 0.94000, and at the time of writing seems to interest the sellers.

The circled wick at 0.94096 previously pushed above the round number 0.94000 which likely consumed most of the sellers and breakout buyers with it, so effectively price is clear up to the 4hr decision-point level at 0.94408 (reported in the last analysis). Focusing our attention on to the temporary 4hr support level that has just formed (level above), this could very well be a ‘dummy’ 4hr support level. Imagine for a minute how many buyers would likely see this buying interest and believe this would be a good place to buy especially on the lower timeframes. Now think how pro money is likely thinking regarding this. If millions of traders are buying there, do they want to be buying with them? Not a chance! They want their stops as this is liquidity for them, and where will the stops be normally set at? Just under this support level. If we see heavy selling sometime soon past this level into the 0.93348 -0.93500 area, be prepared for a nice bullish reaction which could essentially rally up to the 4hr decision-point level at 0.94408, what great R:R that trade would be!

Pending/P.A confirmation orders:

• Pending buy orders (Green line) are seen just above demand (0.93208-0.93417) at 0.93512. The reason a pending buy order is valid here is because we have seen the buyers possibly consume most of the sellers around the round number 0.94000, thus clearing the way north. A retracement is likely to be seen beforehand though to around the 0.93500-0.93348 area, which is just above the aforementioned demand zone.
• P.A confirmation buy orders (Red line) are seen just above the decision point level (0.92566-0.92736) at 0.92775. The reason for placing a P.A confirmation buy order here rather than pending buy order is simply because we were trading just above a daily demand ‘buy zone’ at 0.92046-0.92354, meaning pro money could very well just ignore this level completely and trade deeper into the aforementioned daily demand area, so, confirmation is the order of the day!

• Pending sell orders (Green line) are seen just below supply (0.95425-0.95096) at 0.95052. A pending sell order is placed here due to this being an area where pro money was interested in before; see how close price came to the supply area? (Levels above), this indicates possible strong supply (selling pressure), so the next time price visits we can expect some sort of reaction.
• No P.A confirmation sell orders (Red line) are seen in the current market environment.

• Areas to watch for buy orders: P.O: 0.93512 (SL: 0.93175 TP: Dependent on price approach). P.A.C: 0.92775 (SL: Dependent on price action after the level has been confirmed TP: Dependent on approaching price action after the level has been confirmed).

• Areas to watch for sell orders: P.O: 0.95052 (SL: 0.95467 TP: Depending on price approach) P.A.C: No P.A confirmation sell orders seen in the current market environment.
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