The AUDUSD has been all over the place in the last few months. First, we had the massive 600 pip plunge between early November and mid-December. Then came the 580 pip rebound which was even more aggressive than the decline.
However, since the February high at 0.7740, the pair has been trading in a 250 pip range. And despite the impressive March 15th rally inspired by a more dovish than expected Fed, the AUDUSD is once again under pressure.
But make no mistake, buyers still have the upper hand overall so long as the pair trades above 0.7608 on a daily closing basis. This is a level we’ve had our eye on for quite some time and even gave us a selling opportunity on March 7th.
I remain short from the March 21st bearish engulfing day with a target of 0.7330. That may seem overly extensive, but 0.7330 is the 50% retracement of last year’s range and has been a key factor since 2015. It’s also very near wedge support, a weekly pattern I mentioned this past Sunday.
It’s unclear at this point whether sellers are up to the challenge. One thing I do know is that I’ll be interested in adding to the short position on a daily close below 0.7608 and again below 0.7500.
There is a chance we could see a bounce while the pair trades above the 0.7608 handle. But at the moment I see no reason to cover my short position.
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