ICmarkets

AUD/USD: Technical outlook and review.

FX:AUDUSD   Australian Dollar/U.S. Dollar
83 0 1
Weekly Timeframe: The weekly timeframe shows that price has aggressively broken below a weekly demand area coming in at 0.86591-0.88247, forcing the market to close the week at 0.86324. Assuming that further selling is seen from here, we can likely expect price to test the huge weekly demand area looming below at 0.80646-0.84601 either this week or the next. Let’s take a look to see what the lower-timeframe picture is like.

Daily Timeframe: Price reacted beautifully off of a major resistance flip level seen at 0.85504, which was very likely fueled by the negative NFP numbers released on Friday. Aussie Dollar buying continued right up to a daily support flip level coming in at 0.86591, which is where a little selling interest was seen coming into the market. Price is now effectively trapped between these two levels at the moment. A break above could potentially see price trading up to at least the daily supply zone at 0.88961-0.88302, and conversely, a break below would likely force prices to test a daily demand area seen at 0.83147-0.84336 (located within the weekly demand area mentioned above at 0.80646-0.84601).

4hr Timeframe: For anyone who follows our analysis regularly, you may recall us mentioning on Friday that a potential buying opportunity may present itself if the low 0.85522 is faked out, and as we can all see this did in fact happen. We do hope some of our readers locked in some pips from this move! The market closed on Friday (0.86324) with active selling being seen around a support swap zone at 0.86622-0.86414, which as a result formed a 4hr bearish pin-bar candle. This may likely get a lot of pin-bar enthusiasts excited, prompting them to enter short on the break of the low. This could be a perfect entry south, as let’s not forget that the weekly timeframe is indicating that there is plenty of room to the downside. However, risk/reward considerations for us argue against entering short with prices so close to a potential support level at 0.86.

With all of the above taken into consideration, we feel that there is a good chance further selling will be seen down to at least the 0.86 level (tentative buy orders are seen just above at 0.86052). It is here though that an important decision will need to be made, we have drawn a red circle here to represent this as such. Assuming the bulls come into the market around this important level, price could effectively rally up to around 0.87, since most of the selling opposition has likely been consumed already by the aforementioned pin-bar candle. Conversely, a break below this level would likely attract further selling down to a 4hr Quasimodo support level seen at 0.85522 (Just a little above the aforementioned daily resistance flip level), where we would expect active buyers to be waiting around 0.85568.

We would advise anyone who is considering entering long around the two levels mentioned above to wait for some sort of lower-timeframe confirmation, rather than just entering blindly with a pending order.

Buy/sell levels:

• Buy orders: 0.85568 (Predicative stop-loss orders seen at: 0.85352) 0.86052 (Predicative stop-loss orders seen at: 0.85853).

• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).


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