AUDUSD pushes away from the 0.7500 barrier option

The barrier in AUDUSD has shown it’s been up to the task as it’s defined the low late last week. What is still worrying is the bounce is looking very half hearted.

AUDUSD H4 chart

AUDUSD H4 chart

The bounces so far have failed to clear the Nov lows that we’re broken on Thursday. That failure keeps the downside pressure on and the barrier firmly in the crosshairs. I’d be expecting that another strong run down there might be the straw that breaks the camel’s back, and we could find some hefty stops sitting on a break. In the meantime we have a range of 0.7500-0.7540 to deal with and a break either way will set out the next direction. Below 0.7500/0.7490 we still have the 50.0 fib of the 2016 move at 0.7475, while above 0.7540, we have other minor broken lows around 0.7550/60 and 0.7575. That area is bordered by both the 55 & 100 H4 ma’s.

I think we’re going to see some treading water as the big event this week is obviously the FOMC, so the majority of USD pairs are likely to stick to well worn ranges. Outside of the normal knee-jerking we’ll see into/over the FOMC, I think that USD still faces a bearish theme after the hike. In that scenario, AUDUSD should bounce but if it fails to take out any of these resistance areas, or shows signs of struggling compared to other pairs, that will be a big signal that we’ve not brokern the nearish trend.

For now, if I fancied a long I’d  lean against the barrier but frequent tests will require tighter and tighter stops in case it gets busted. 0.7600, 0.7630 looks to be the better place for shorts, again with a fairly tight stop just above 0.7650.

Another thing that could be if interest is that AUDUSD futures long positioning increased last week. I’d like to see what happened in the week to tomorrow, considering that the price fell below the levels where those longs started building. It could mean that a break below 0.7500 could see a few of those longs squeezed out, adding to any break down.

Ryan Littlestone

Psychedelic chartist extraordinaire. Have your shades ready.
Philosophy: “Don’t be a Dick for a tick”

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Ryan Littlestone

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