Shorts beyond 0.76 look tasty
Weekly gain/loss: +0.66%
Weekly closing price: 0.7610
Although the commodity currency recouped some of its recent losses last week, weekly structure, in our view, remains unchanged from the previous weekly outlook. To the downside there is a particularly interesting weekly support we have our eye on. Merging with a weekly channel support extended from the low 0.6827, there’s a nice-looking weekly AB=CD (see black arrows) 161.8% Fib ext. point at 0.7496 that also aligns with a weekly 50.0% value at 0.7475 taken from the high 0.8125.
The story on the daily timeframe, nevertheless, shows that there is room for price to advance up to a nearby daily supply area coming in at 0.7695-0.7657. Looking to the downside, we do not see much stopping price from challenging last Tuesday’s low at 0.7532, followed closely by daily support penciled in at 0.7505.
For those who read previous reports on the AUD/USD you may recall that we highlighted a H4 resistance level seen at 0.7632, which happened to converge with a H4 AB=CD 161.8% ext. point at 0.7633. We also mentioned that although this level boasted strong confluence, it was a somewhat risky sell according to daily structure. This was largely because the lower edge of a daily supply at 0.7695-0.7657 sat only 25 or so pips above the H4 resistance, and thus could have encouraged a fakeout to take place.
As is evident from the H4 timeframe, the H4 resistance managed to hold firm. We did not short this level as we needed additional confirmation in the shape of a full or near-full-bodied H4 bear candle. The one that did print was far too big and provided little room for profit due to how close 0.76 was.
Suggestions: Put simply, the sellers will need to prove themselves further for us to short this market. A decisive H4 close below 0.76, followed up with a retest and a reasonably sized H4 full or near-full-bodied bearish candle would, in our book, be enough to warrant a sell, with an ultimate target set at 0.75.
Data points to consider: US new home sales at 3pm GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 0.76 and then look to trade any retest seen thereafter (waiting for a reasonably sized H4 bearish candle to form following the retest – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).
Weekly closing price: 0.7610
Although the commodity currency recouped some of its recent losses last week, weekly structure, in our view, remains unchanged from the previous weekly outlook. To the downside there is a particularly interesting weekly support we have our eye on. Merging with a weekly channel support extended from the low 0.6827, there’s a nice-looking weekly AB=CD (see black arrows) 161.8% Fib ext. point at 0.7496 that also aligns with a weekly 50.0% value at 0.7475 taken from the high 0.8125.
The story on the daily timeframe, nevertheless, shows that there is room for price to advance up to a nearby daily supply area coming in at 0.7695-0.7657. Looking to the downside, we do not see much stopping price from challenging last Tuesday’s low at 0.7532, followed closely by daily support penciled in at 0.7505.
For those who read previous reports on the AUD/USD you may recall that we highlighted a H4 resistance level seen at 0.7632, which happened to converge with a H4 AB=CD 161.8% ext. point at 0.7633. We also mentioned that although this level boasted strong confluence, it was a somewhat risky sell according to daily structure. This was largely because the lower edge of a daily supply at 0.7695-0.7657 sat only 25 or so pips above the H4 resistance, and thus could have encouraged a fakeout to take place.
As is evident from the H4 timeframe, the H4 resistance managed to hold firm. We did not short this level as we needed additional confirmation in the shape of a full or near-full-bodied H4 bear candle. The one that did print was far too big and provided little room for profit due to how close 0.76 was.
Suggestions: Put simply, the sellers will need to prove themselves further for us to short this market. A decisive H4 close below 0.76, followed up with a retest and a reasonably sized H4 full or near-full-bodied bearish candle would, in our book, be enough to warrant a sell, with an ultimate target set at 0.75.
Data points to consider: US new home sales at 3pm GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 0.76 and then look to trade any retest seen thereafter (waiting for a reasonably sized H4 bearish candle to form following the retest – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).
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