The AUDUSD daily trend is down; however, the recent price action suggests the price is in a retracement phase. Could this provide a short term long opportunity back to resistance?
We’re going to look at AUD/USD as the price could retrace to some key resistance levels.
There is an overall downtrend in AUD/USD. However, the recent price action suggests that the market is moving towards a retracement phase.
When that happens, we typically want to look for a continuation of the downtrend from specific support and resistance levels. We could short the market at the previous structure lows. But, we’re in a phase two retracement. We want to look for countertrend moves instead.
The daily price action shows the price retracing to the key resistance level. It will potentially continue the downtrend we have on the daily timeframe.
When we have impulse and retracement phases in a lower timeframe, we usually see an uptrend form.
The market is making an uptrend after forming a higher high, higher low, and higher high in the four-hour timeframe. We want the price to go back to the previous structure support, reject with a low ranging candle or a bullish price action, then look for long opportunities to trade into the key resistance area.
If the daily timeframe is in a retracement phase, we should see an uptrend on the four-hour timeframe. There are higher highs and higher lows forming. If the price retests the highs, we can look for short-term long opportunities.
Once the price reaches that area, you’ll want to look for reversal patterns like a Head and Shoulders pattern or a Double Top pattern. This would suggest that the downtrend could continue, which will cement the daily moving towards the impulse phase on the overall trend.
So, keep an eye on AUD/USD. It could be the one to watch today. I like the opportunity of it pulling back to the key resistance for short-term long opportunities.
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