Forex Analysis – AUDUSD – Technical outlook and review
Forex Analysis – Weekly gain/loss: – 148 pips Weekly closing price: 0.7298 Weekly view: Although the weekly candles established a base around the support area coming in at 0.7438-0.7315 in recent weeks, the bid-side of this market came under significant pressure last week. As can be seen from the chart, the strength behind the downside move was enough to force the pair beyond the support zone and into the 2016 yearly opening level at 0.7282. Should the buyers fail to defend this region this week, we may see price head down to the support area at 0.7096-0.7164.
Daily view: The story on the day chart shows that price entered into a steep three-day bearish descent last week, sparked by the Fed hiking interest rates. The move, as we hope is demonstrated clearly on the chart, closed the week by whipsawing through the lower edge of a support area given at 0.7281-0.7334. While there is a possibility that a pockets of stops were taken from beneath this zone, thus weakening the buyers, price will not likely drop far since there’s a strong-looking demand base lurking just below at 0.7201-0.7255.
H4 view: Mid-way through Friday’s London session, the commodity currency resumed its decline against the US dollar, ending the day breaking below and retesting the 0.73 handle as resistance. Looking at this market solely through the H4 window, we would expect further selling to be seen down to a fresh demand coming in at 0.7218-0.7231. That is, of course, assuming that offers remain strong around 0.73! Direction for the week: With the 2016 yearly opening level now in play, bolstered by a nearby fresh daily demand at 0.7201-0.7255, the buyers could possibly make an appearance this week and recoup some of last week’s losses.
Direction for today: The psychological band 0.73 is key today. A bearish resumption from this number will likely send the unit down to the daily demand area mentioned above at 0.7201-0.7255, and maybe even the H4 demand seen within it at 0.7218-0.7231. Conversely, a break back up 0.73 could prompt an advance towards H4 supply seen at 0.7369-0.7352.
Our suggestions: The H4 demand at 0.7218-0.7231 is considered, at least by our desk, to be a high-probability buy zone. Not only is it positioned within a fresh daily demand area, but it is also located nearby the yearly opening level. Well, close enough to help facilitate a fakeout through the yearly level, that is! We would, dependent on the time of day, look to buy from the H4 demand base at market with stops set a few pips below the zone. Conservative traders, however, may opt to place stops below the daily demand as this would avoid any fakeout that may take place through the H4 area. Should 0.73 establish a support on the other hand, one could also look to buy from here, targeting the above said H4 supply.
Still, we would recommend waiting for both a retest and at least a H4 bull candle to form as confirmation, before looking to press the buy button. Data points to consider: There are no high-impacting news events on the docket today relating to these two markets. Levels to watch/live orders: • Buys: Watch for a close back above 0.73 and look to trade any retest seen thereafter (H4 bull candle required following the retest before pulling the trigger, stop loss: ideally beyond the trigger candle). 0.7218-0.7231 (an area, dependent on the time of day, fit for a market/pending order, stop loss: aggressive – 0.7216 conservative – 0.7298). • Sells: Flat (stop loss: N/A)..