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Aussie dollar technical picture going into AUS retail sales...

FX:AUDUSD   Australian Dollar / U.S. Dollar
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Kicking this morning’s report off with a look at the weekly timeframe , the research team notes price action came within a pip of connecting with its 2017 yearly opening level at 0.7199 Thursday. Although we expect a bounce lower from here, traders still need to prepare for the possibility of a run above this level towards notable resistance standing at 0.7371.

Encapsulating the 2017 yearly opening level mentioned above at 0.7199 is a daily supply zone printed at 0.7203-0.7165. Note this area boasts strong momentum to the downside out of its base, indicating strength. It might also be worth noting we have another layer of supply directly above (stacked supply) at 0.7246-0.7178.

A closer reading of this market pulls in the H4 candles which currently hover just south of its 0.72 handle. 0.72 remains a critical level in this market, according to our analysis. Besides the H4 RSI offering a confirming overbought reading, 0.72 also represents the 2017 yearly opening level at 0.7199 on the weekly timeframe . Further adding to this, traders may also want to acknowledge daily supply around 0.7203-0.7165 currently in play.

Areas of consideration:

0.72 is a key level in this market for potential shorts. As round numbers are prone to stop runs/fakeouts, however, traders are urged to consider waiting for additional confirmation to form before pulling the trigger. A bearish candlestick pattern, for example, not only identifies seller interest, it also offers structure that defines entry and stop parameters.

In terms of downside targets from 0.72, the 0.71 handle appears logical, thus providing traders ample room to secure reasonable risk/reward.

Today’s data points: US CPI m/m and US Core CPI m/m.
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