#AUDUSD has recently rejected a major swing level.
But what will happen to the currency pair next?
Watch this video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to take a look at AUD/USD. We haven’t covered this pair in a while because the market has continued in this uptrend. That hasn’t suggested that the market is going to roll over.
Unlike other currency pairs, the market hasn’t come into that much of significant resistance when we looked at the most traded levels, let’s say, on EUR and Kiwi. We had a collection of candlesticks or range market where the market came up to reject the level and started to pull back. Instead, we’ve broken out and retested multiple structure levels on Aussie, which is around this area where we can see that the market found some resistance here, here, here and here, found a bit of support there, and also a resistance there.
It is a large level of interest. It doesn’t have the institutional analysis surrounding that right now. However, we do have a potential for the market to pullback, simply because lots of the majors are setting up in similar ways. The AU Dollar is the one that’s looking quite good.
Technically, in the daily timeframe, we’re still very much trending to the upside because the price is making higher highs and higher lows. I define reversing the trend when the market starts to make a new lower low. For instance, back here, the market began to make a lower low there because we were in a pullback phase on the market. The market continued to find support at this point. We came up; we hit resistance, we traded back down to the support, we then found support, then we broke out to the upside. Every time the market hits a little bit of a peak and breaks out, we can continue to look for those buying opportunities.
Now, we’re at this major swing level. What we want to be looking for is this pattern where the market starts to form a new lower low. At the moment, we don’t have that yet. We have the market still finding a bit of a support point, much as it did down here. What we have to take into consideration is what we’d need to see. I would personally like to see two closes below this low, in particular, where the market is finding some support at the moment. The reason is that it would confirm a break of the trend for me and then, what I’d be looking for is the price to pull back.
There’s a couple of levels I quite like the look at, where if the market does break down, we’d be looking at in terms of support and resistance levels.
If I could go into the four-hour timeframe and highlight these levels to you, we can see that this level, here, is quite significant. 7741, we can see that the market found resistance, resistance, support, support, support, resistance, support, a little bit of support, and resistance, here, most recently. If the market were to break this low and continue to close below this low – it looks like this for instance – this could be an area on the pullback where the market may want to target for considerable short positions to re-enter.
The second area that I like the look at is down here at 7710 because it’s not as strong as a level, but there has been a lot of market interaction at this point. Here, you can see a little bit of resistance, support, a little bit of resistance again, and some chopping of the market there. 7710 is also a great level to look for shorting opportunities on AUD/USD. Remember, I want to see two clear closes below this low here first. That will confirm the break-in trend once we get that, I’m happy to look for shorter opportunities.
Now, for the people that like to take a little bit more risk in the markets and are looking for the early extension of the move, you can be looking for some strategy set up. I’ve got a 30-minute strategy on my charts at the moment, where we have the 50 and the 200 moving average. If the price wants to pull back on the four-hour timeframe and climb into this 7710 and start to produce some bearish price action, we’ve been in an overbought condition; you could look for a strategy to short. But, if you are going to look for anything like that, I would only target the current lows. I wouldn’t go trading beyond that and look for extended targets because the price may only pullback into that level, come back up, retest that 7740, and then drop to the downside.
Keep an eye on Aussie. I like the way that it’s starting to shape-up on the weekly timeframe. I wish it does a little bit more of a breakdown on the daily timeframe. Once we get that confirmed change in trend on the daily, we’ll look for further opportunities.
Thanks for watching. I’ll speak to you soon.
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