Despite the DJIA rallying to fresh highs yesterday, a highly correlated market with the Aussie dollar, the pair sold off from the 0.75 handle to lows of 0.7461 on the day. What is also interesting on the H4 chart is that price came within a few pips of connecting with a H4 mid-way support line at 0.7450. This – coupled with a mid-range H4 Quasimodo support at 0.7446, an ascending H4 channel support line taken from the low 0.7148 and merging with a daily , makes this an awesome place to look for a bounce!
Our suggestions: Despite price coming so very close to 0.7450, our team still recommends keeping a close eye on this number today since there’s still a chance that price could pull back. Nevertheless, we would advise only trading this barrier should one be able to pin down a lower timeframe entry. This could be in the form of an engulf of supply followed by a subsequent retest, a break/retest or simply a collection of well-defined buying tails around the 0.7450 region. Stops are usually placed 5-10 pips beyond confirming structures and in this case preferably beyond the H4 channel support line.