AUDUSD hits a fresh Lowe
Look at that, two plays on the word “Lowe/Low” to open things up. That’s value for money folks ?
This week so far has seen the Aussie driving on both sides of the street. The market took the RBA meeting as less dovish/more hawkish and jumped, and now it’s running the other way after RBA’s Lowe came out last night and burst that balloon. I think we have a distinct issue here and one that’s worth looking at trading.
I think both reactions went to far. The market overreacted to the RBA and have now doubly overreacted to Lowe. What I think we’ve seen are extreme reactions that are not justified. To that end, I’m looking to fade this move against some prior support.
That support I’m watching comes just under the current price and around 0.7100/15.
I’m looking for a long into that support area below but what I need to know is where the resistance will develop. When we see a big move like this, we need to let the price levels develop (in this case resistance). Earlier in our trading room I suggested that the area around 0.7137/45/50 (big blue circle) was where I would expect to see it. Lowe and behold (I’ve done it again with the low/Lowe reference ? ), we see that resistance has come in around that former support area (small blue circle). That’s important because it now sets the battleground between the low of 0.7123 and this developing resistance at 0.7137/45/50. If we break below the low, we’re on for a test of those support levels, back above resistance and we head back higher.
If we move back up, then 0.7190-0.7200/10 becomes the main level to watch next and one I would be targeting as a take profit point.
My only concern for the trade is that 0.7123 low because that could well be the protection of the 0.7100/15 support area, so if 0.7123 breaks, it’s highly likely we test 0.7100, so I’d be more inclined to get in closer to 0.7100 than at 0.7115. For a stop, I’d look to place one under the late Jan low at 0.7075.
If we don’t see my preferred entry area, I may look to go long on a break back up above the 0.7137/45/50 area, IF I see confirmation of that break by the level holding after.