Daily view: The recent buying on this pair pushed price above near-term supply at 0.7061-0.6991. However, it was only once price successfully retested this barrier as support on Friday was we convinced that the majority of offers were cleared out from here. Consequent to this, we firmly believe the path north is now free up to supply drawn from 0.7204-0.7119.
4hr view: Overall, Friday’s trade was relatively dull. Price, once again, drew support from the mid-level number 0.7050 and spring boarded itself north reaching highs of 0.7092 on the day. Due to this lackluster performance, much of Friday’s analysis on this pair still holds weight…
With the Aussie holding firm above 0.7050 support, we believe we may see the D-leg of a terminating around the 0.7170 area complete this week. This is certainly somewhere we’d consider selling if price reaches this high, since it sits within a daily coming in at 0.7204-0.7119. We also like the way this completes just above the supply area at 0.7152-0.7120 – this has fakeout written all over it!
However, even if price does reach our zone this week, we still need to tread carefully. Let’s not forget that even though price is currently trending south, we have recently seen buying pressure from weekly demand at 0.6768-0.6942. This warrants caution. Unless we are able to spot lower timeframe selling confirmation around this sell zone, we’ll quite happily pass on the trade, since getting caught on the wrong side of weekly flow will not do your account any favors!
Levels to watch/ live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: 0.7071 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).