AUD/USD: Technical outlook and review.

FX:AUDUSD   Australian Dollar / U.S. Dollar
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Weekly Timeframe: Active selling has been seen coming into the market on the weekly timeframe , which could mean the spike seen below the weekly demand area at 0.86591-0.88247 may well have been a continuation move, rather than a fakeout for higher prices. Let’s see what the lower timeframes have to say.

Daily Timeframe: The daily timeframe shows exactly why a sell off is being seen, and it comes in the form of a daily decision-point supply area at 0.88961-0.88302. A deep test of this area has forced the buyers to take a back seat on this one, as the path south seems relatively clear for further selling to be seen down to at least the major daily demand area at 0.86183-0.87183. Will this be enough to stop price from trading higher? Only time will tell!

4hr Timeframe: Price is trading very close to a 4hr demand area seen at 0.87251-0.87506, since an aggressive sell off has recently been seen down from a 4hr supply area coming in at 0.88961-0.88629. We feel a reaction will be seen at the near-term 4hr demand area, however not an exciting one, and certainly not one that we shall be buying.

The daily timeframe is showing room for prices to move lower, and as such, there is a good chance that a break below this 4hr demand area will be seen. As a consequence this would likely encourage further selling down to at least the 0.87 level, where we agree a reaction could be seen. With this in mind, we currently have our eye on a 4hr Quasimodo support level just below at 0.86629 (active buy orders likely set just above at 0.86692). The reasons for this are as follows: firstly, well-funded traders like to get the best prices in each zone, and this usually is the deepest area, and secondly, see that tail/spike at 0.86414? This was where price pushed below the weekly demand area mentioned above at 0.86591-0.88247, which in turn likely means there are a lot of unfilled buy orders around this area, since it takes serious money to break below major areas.

Nonetheless, even though we are expecting a reaction to be seen around the 0.86692 level, we are also aware this could only be for a bounce, and that price could indeed continue south.

Buy/sell levels:

• Buy orders: 0.86692 (Predicative stop-loss orders seen at: 0.86346).

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

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