ICmarkets
Short

We are bearish the Aussie dollar beyond demand at 0.7581-0.7597

FX:AUDUSD   Australian Dollar/U.S. Dollar
136 0 3
Weekly gain/loss: - 10 pips
Weekly closing price: 0.7594

Weekly view: Despite the Aussie remaining relatively unchanged by the week’s close, the unit chalked up its second consecutive selling wick that pierced through a trendline resistance extended from the high 0.8295. As a result of this, the bears may look to head down to an ascending channel support line this week drawn from the low 0.6827.

Daily view: The story on the daily chart shows that the commodity currency closed the week mid-range between supply coming in at 0.7765-0.7714 and a support area carved from 0.7517-0.7451. Given that the support area intersects with the above said weekly ascending channel support line (the next downside target), there’s a good chance that this area will see some action this week.

H4 view: During the course of Friday’s sessions, the H4 candles printed a beautiful array of buying tails, which, as you can see, pierced through the demand base at 0.7581-0.7597. Beyond this area, we have our eye on the combined support/Quasimodo level at 0.7533 (sits directly above a daily support area at 0.7517-0.7451), while to the upside, the runway looks clear (assuming price can close above the 0.76 handle that is) for prices to challenge the H4 mid-way resistance 0.7650.

Direction for the week: Through our analysis on the higher timeframes, we feel that the pair is likely heading lower this week, at least until it connects with the above said daily support area.

Direction for today: In that the majority of buyers are likely consumed around the current H4 demand thanks to Friday’s aggressive H4 tails (coupled with the higher-timeframe structures), a downside move, in our estimation, is more favorable.

Our suggestions: Watch for price to close below the current H4 demand. Should this come into view, wait for a retest to the underside of this zone followed up by a H4 bearish close. Once this has been satisfied, a short from here is, at least in our opinion, valid down to the H4 support/Quasimodo at 0.7533.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for a close below the H4 demand at 0.7581-0.7597 and then look to trade any retest seen thereafter (H4 bearish close required – stop loss: ideally beyond the trigger candle).
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