Yesterday we discussed how the AUDUSD had reached the confluence of resistance at 0.7830. The area attracted a few sellers after I released that commentary but has since fallen with today’s 140 pip surge.
However, buyers are now facing yet another confluence of resistance, this time at 0.7935. This was the next level of resistance that I mentioned in Monday’s commentary.
The 0.7935 handle served as resistance between 2004 and 2006. It’s also the March 2015 high.
In addition to the 0.7935 handle, we have ascending channel resistance that extends from the February highs from earlier this year. Note how the trend line support between the December 2016 low and the May 2017 low is the bottom of this channel.
But just like yesterday’s commentary, we’re dealing with significant bullish momentum. On top of that, today’s session has reached levels we haven’t seen since May of 2015.
As such, trying to sell up here may not be the best idea. And if you do sell, I would suggest making a daily close (5 pm EST) back below 0.7830 a requirement to stay with the position.
One event that could trigger quite a bit of movement for the AUDUSD is Wednesday’s employment figures out of Australia. The numbers will be released at 9:30 pm EST and have a reputation for triggering an increase in volatility.
I’m going to stay on the sideline until Wednesday’s events are behind us. Buyers will need a daily close above the 0.7935 area to pave the way for a move higher. A close above 0.7935 would expose the next key resistance level at 0.8060.
Alternatively, a bearish pin bar from current levels could make for an appealing short setup. Of course, it would all depend on how and where the candlestick forms.
Key support comes in at 0.7830 followed by 0.7740.
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