ICmarkets
Short

Our take on the Aussie...

FX:AUDUSD   Australian Dollar/U.S. Dollar
121 0 5
Weekly gain/loss: +136 pips
Weekly closing price: 0.7620

Weekly view: After a rather aggressive move north seen last week, prices settled just above resistance coming in at 0.7604, following a rebound off of trendline resistance taken from the high 0.8295. Although price has effectively closed above the aforementioned resistance barrier, we feel a more decisive close is required before one can say that this level is consumed. In the event that we see the sellers retaliate this week, the next downside target for us would be the channel support line taken from the low 0.6827. Conversely, a continuation move north from here would need to take out offers around the trendline resistance before being able to play for the resistance level at 0.7846.

Daily view: Thursday’s rebound from the underside of supply seen at 0.7719-0.7665, followed by Friday’s extension lower placed prices just ahead of the above noted weekly resistance level . As we already mentioned, we are not yet discounting this weekly level as resistance, but if daily prices find support above this line during the week, we may see higher prices eventually come into view.

H4 view: On the H4 chart, we can see that Friday’s action sold off following Thursday’s breach of H4 supply at 0.7656-0.7641 down to lows of 0.7609 on the day, clearly helped by the aforementioned daily supply zone .

Direction for the week: This is a rather tricky beast to judge at the moment, as we’re unsure in regard to the weekly resistance level mentioned above. As such, higher-timeframe direction, at least in our view, is rather limited for the time being.

Direction for today: Again, this unfortunately depends on how prices behave around the weekly resistance level today.

Our suggestions: On account of the above points, here is what we have logged going forward…

• Watch for a decisive close below the 0.76 handle (represents the weekly resistance level ). Supposing that the H4 candles maintain a bearish tone beyond this number, we may start thinking about considering shorts down to the H4 support area at 0.7568-0.7549, followed by the 0.75 hurdle.

• If 0.76 holds as support, nonetheless, we will not be comfortable buying above here until we’ve seen a more decisive weekly close higher. With that being the case, the only resistance we see worthy of consideration above this number is 0.7698: a H4 Quasimodo resistance barrier, which unties beautifully with the 0.77 handle. Given the confluence seen here and the higher-timeframe structures surrounding this zone, we feel a pending sell order is viable, with stops placed above the apex of this formation at 0.7735.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 0.7697 pending order (Stop loss: 0.7735).
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