The AUDUSD 0.8000 level survives one test but we’ve had a quick bounce back
AUDUSD has been approaching a big level at 0.8000. Overnight the price touched 0.7999 keeping the big figure and a barrier intact. The resulting sell off threw the price down to 0.7940 but we’ve come swiftly back again this morning. Sellers from the high have been in to protect that and 0.7985 was the best we could do in that test. The last week or so has seen a pattern of big levels being broken and prices surging. 0.7900 played the same role for quite some time and we’re seeing the same here.
Looking at the wider picture, we’ve yet more big levels coming up and these are the types of levels that will define whether we are really going to see a meaningful turnaround in direction.
AUDUSD weekly chart
At this point, you can see we’re approaching a crossroads of sorts. We have the slow uptrend from 2016 still in place but we’re going to be meeting some far longer-term resistance levels that are going to put that uptrend to the test. That starts from here until the top of the trendline at around 0.8200.
Looking at the fundamentals, the folks down under aren’t doing too badly but the RBA won’t want the Aussie dollar getting too excited. The bigger driver, which is becoming abig factor across the FX sphere, is the weakening US dollar. If we are on the cusp of a really big unwind in that, we could then be on course for a reall attempt to eat into the drop from 2011, the first test of which will be around the 38.2 fib of that move at 0.8451.
Trading wise, The 0.7700/70 area has been an important pivot, and one I’ve written about before. Stay above there and the bulls are happy. There’s several big levels to test the rally with shorts, not least of which is the 0.80 level, although the PA suggests that the buyers are not giving up on that too easily. Catching a short last night would have brought good returns but those may diminish the more times we knock on the door. 0.8064 was lon-term support that turned resistance and is another level to watch, as is the 2017 high.
We should be looking both ways to trade and this pair looks like it’s well into ‘buy the dip’ mode so 0.7900 is the number to watch outside of the intraday support levels that develop. As mentioned above, the closer intraday level is 0.7935/40.
AUDUSD 30m chart
So far 2018 is the year of the breaks and so lean on the big levels for support or resistance but keep it tight and look to go with any breaks. Market’s were pretty listless into the latter part of last year so grabbing a new trend early by switching positions quickly looks the way to play it.
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