Daily view: The shows that the daily swap level 0.7691 managed to provide support to the market from Tuesday onwards last week. Consequent to this, price closed the week (0.7814) attacking the 0.7841 region (17/04/15). If the buyers are successful this week in breaking above this high, the route north will highly likely be clear for a further advance up to the upper range boundary seen at 0.7875.
4hr view: Friday’s trading action saw the Aussie pair firmly close itself above the 0.7800 mark. However, before we all go hitting the buy buttons, we may have to contend with selling pressure from the high 0.7841 just mentioned above in our daily view.
Taking all of the above into account, we feel there’s a good chance the market will likely retest the 0.7800 barrier today. That being said, traders should be prepared for the possibility that this level may be faked lower down into the 4hr demand area coming in at 0.7763-0.7788 before we see any real buying pressure, if any. It would be at this point, we’d begin watching for lower timeframe buying strength to present itself. If it does, our team would consider an intraday buy position up to the 0.7850 mark.
Notice that the price action on the 4hr Aussie chart here is very similar to that of the Euro 4hr chart (see above). That being the case, should price reach the 0.7850 level this week, this will be where we shift into ‘short mode’. This number, along with other confluent factors gives us reason to believe this is where the 4hr minor uptrend will likely terminate and bears will take over. A short trade from this number is being considered for the following reasons:
1. Fresh 4hr supply (seen in green) coming in at 0.7883-0.7852, which coincides beautifully with a potential Bat reversal zone (0.7850/0.7889).
2. The overall trend still remains southbound. Granted, price is still trading around weekly demand (see above) but with the way price has been behaving around this area the past few months does not exactly inspire buying confidence.
3. The 4hr also has additional resistive pressure from a daily swap level coming in at 0.7875.
Targets for any shorts here will be totally dependent on how price approaches this 4hr reversal zone.
Current buy/sell orders:
• Buy orders: 0.7800 region (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: 0.7850/0.7889 (Predicative stop-loss orders seen at: Stops will likely be placed above the 0.7900 round number).