AUD/USD: Technical outlook and review...

FX:AUDUSD   Australian Dollar / U.S. Dollar
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The past week saw the weekly chart paint a rather vicious-looking selling wick from highs of 0.7242. In spite of this, price failed to close below support drawn from 0.7035 ending the week relatively unchanged by the close 0.7058. Therefore, it’s highly likely that this weekly support barrier will come into play this week, so you might want to take a note of this number.

Looking at the daily chart , one can see two things. Firstly, the Aussie was relatively bullish up until Friday which saw the pair decline in value around 140 pips (open/close). Secondly, check out how responsive the aforementioned weekly support has been in the past on the daily timeframe (see arrows). Each time price visited this barrier, a sizable reaction was seen.

A quick look at Friday’s sessions on the H4, however, shows that following the NFP release a quick jab north to highs of 0.7215 was seen, before plummeting lower and closing the day beyond psychological support 0.7100.

With all of the above taken into consideration, our team has their eye on the 0.7000 region this week for potential buys due to the following reasons:

1. By and of itself, 0.7000 is a number watched by a huge amount of traders thus is expected to hold as support.
2. Just beneath this 0.7000 sits a 61.8% Fibonacci level at 0.6989.
3. 35 pips above 0.7000 lurks the weekly support mentioned above.

The bounce from this barrier could possibly be large, so we’re willing to be patient here. Our buy zone is fixed between 0.7035/0.6989 (green rectangle ). One could enter at market within this zone without waiting for confirmation in our opinion, but, us being conservative we have chosen to look to the lower timeframes for our entry since we want to get in as low as possible on this one.

Levels to watch/live orders:

• Buys: 0.7035/0.6989 Tentative – confirmation preferred (Stop loss: dependent on where one confirms this area).
• Sells: Flat (Stop loss: N/A).
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