ICmarkets
Short

Our take on the recent Aussie movements....

FX:AUDUSD   Australian Dollar/U.S. Dollar
187 0 1
In consequence to yesterday’s decline and rebound from 0.7322 (Thursday’s low), this pair appears to be in the process of chiseling out a consolidation zone between 0.7388 and 0.7322. Looking only at the 4hr timeframe, one could look to trade the limits of this potential 4hr range today. We would not advise simply placing a pending order at the extremes and hoping for the best though, as this could end with your stops being taken out on a fakeout. As such; waiting for the lower timeframes to prove there is some strength residing at your chosen level would likely be the best path to take.

A breakout either above or below this 4hr range, however, would be very interesting. Above shows room for price to rally towards 0.7418/0.7436 – a sell zone of ours chalked up a few days ago. A break below this range, nonetheless, potentially opens up the path towards the 4hr Quasimodo support level at 0.7282. Since there is more space below this range than above, one could look to trade the retest following a break lower and target 0.7282 as a first take-profit level…

In spite of the above, when we include the higher timeframes into the mix the picture looks a little different. The downtrend on the weekly timeframe is strong to say the least. Furthermore, price is trading relatively near to both a daily resistance level at 0.7418, and a weekly swap (supply) area at 0.7449-0.7678. For this reason, our team is still in favor of shorts.

Levels to keep an eye on are as follows (lower timeframe confirmation required):

1. 0.7388 – the top-side of the 4hr range discussed above.
2. 0.7418/0.7436 – a daily resistance level which converges nicely with a 4hr downtrend line taken from the high 0.7494.
3. And finally, one could watch for a break below the 4hr range low 0.7322, and look to enter on a retest of this number.

Levels to watch/ live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 0.7388 Tentative – confirmation required (Stop loss: dependent on where one confirms this level) 0.7418/0.7436 Tentative – confirmation required (Stop loss: dependent on where one finds confirmation within this area) Watch for bids at 0.7322 to be consumed and then look to enter on a retest of this number (confirmation required).
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