ICmarkets
Short

Our thoughts on the Aussie...

FX:AUDUSD   Australian Dollar/U.S. Dollar
189 0 6
Weekly gain/loss: - 9 pips
Weekly closing price: 0.7604

Weekly view: Although the pair closed the week relatively unchanged, what the candles did provide us with was a beautiful-looking bearish 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: Turning our attention to the daily candles, Thursday’s action responded beautifully to the supply zone at 0.7765-0.7714 and its corresponding trendline resistance taken from the high 0.7835. From this angle, the next area in the firing range is seen at 0.7517-0.7451: a support area that merges with the above said weekly ascending channel support.

H4 view: For those who read Friday’s report you may recall that we were looking to short between the H4 mid-way resistance 0.7650 and H4 resistance 0.7645. As you can see from the chart, price stabbed this area beautifully going into the London open and proceeded to fall sharply down to a fresh H4 demand base coming in at 0.7581-0.7597. Unfortunately, we were unable to pin down a lower timeframe sell setup from the 0.7650/0.7645 region, thus missing the trade. Well done to any of our readers who managed to net some green pips from this move!

Direction for the week: Until the commodity currency connects with the daily support area seen at 0.7517-0.7451, the pair is likely to weaken in the coming days.

Direction for today: While price has steadied itself around the aforementioned fresh H4 demand area, we feel that the bulls will struggle to find a foothold here since there is little corresponding support coming in from the higher-timeframe structures. Therefore, we feel a move lower may take place today.

Our suggestions: Put simply, we have no interest in buying from the current H4 fresh demand base today. With that being the case, our team has noted that they’re watching for price to CLOSE below this zone, as this would not only confirm bearish strength on the higher-timeframe picture, but also open up the path south for price to challenge the combined H4 support/Quasimodo level at 0.7533, which is conveniently positioned just ahead of the aforementioned daily support area.

Should a close below the fresh H4 demand take place, and price follows up with a retest to the underside of this area as supply, we would look to short on the close of any reasonably sized H4 bearish candle.

As there’s no Aussie economic data scheduled for release today, focus will likely shift to the speeches from Fed officials at 1pm and 6pm GMT.

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 prior to pulling the trigger).
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