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The #AUDUSD price is breaking into new lows. Will this offer further short opportunities, or will the price reverse?
I’m going to talk about AUD/USD as the price broke through the lows.
Daily timeframe
We don’t know yet if we’ll see the price continue to push lower or reverse today. We have some potential opportunities, but we can also look at the confirmations of what we need to see if the downtrend continues.
It may continue if we get two closes below the previous structures. Two closes cements the breakout, and that would be ideal to look for further shorting opportunities.
We already went short with the AU Dollar against the EUR. That was a weekly trading setup, and the market breaking down is helping that move and form. If we get a secondary close, we would want the price to go to the structure lows for a continuation trade.
The AUD/USD price broke through fresh lows overnight, showing the weakness in the AU Dollar. To confirm the breakout, we need to see two daily candle closes below the current lows, which could offer long-term short opportunities if the price retests and rejects the lows.
When the price comes to the structure lows, we want to see something similar to what happened in the 0.76 level where we had low ranging candlesticks forming – that’s when you want to start jumping on your trades.
We have to look for a breakout first, but we have to be careful because we could see a false breakout and the price could move back to the 0.76 level. However, I don’t think that’s what we should be looking for due to the strength meter showing the Aussie as the weakest currency, and the US Dollar as the strongest.
5-minute timeframe
Yesterday’s low was around 7462, with the midpoint at 7497. Yesterday’s high is not important because I don’t think the price will reach that again today. However, the midpoint level can act as resistance if the price comes back to it.
We could look for short opportunities if the price goes back to those areas. For example, if the price returns to yesterday’s low at 7462 and forms a double-top pattern, then we could look for short opportunities for a day trade. Moreover, if it breaks towards the midpoint again, then we could also look for short opportunities at the 7497 area.
We could also measure the price range during the Asia session. In the Asia session high low, the 50% is also yesterday’s low, offering us an area of resistance. We could see a move back towards the midpoint area then a break to the downside. At that point, we should look for reversal patterns.
Alternatively, we can watch the Asia session midpoint and the daily midpoint for a short-term day trading opportunity. If the price rallies back to those levels, we can look for reversal patterns like the double top or the head and shoulders pattern for a short opportunity.
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