On Monday I mentioned how the AUDUSD was testing support turned resistance at 0.7608. Following a print of 0.76082, the pair dropped 30 pips into the close, proving the level is worth keeping an eye on.
The problem I had with taking a short from this area was the RBA rate decision and statement. Both events took place within the past 24 hours, and due to the impending volatility, I decided to stay on the sideline.
The pair had also become a bit overstretched to the downside, making an entry unfavorable at the time.
However, as part of Monday’s commentary, I mentioned the idea of watching for a sell signal once the dust had settled from the RBA-induced volatility. It looks like that time has come.
Yesterday’s bearish pin bar from the 0.7608 area suggests that sellers remain in control. The signal comes after the pair tumbled last Thursday for a single session loss of more than 100 pips.
From here traders can watch for selling opportunities so long as the AUDUSD trades below 0.7608 on a daily closing basis. Key support comes in at 0.7520 followed by 0.7450.
Due to the size of Tuesday’s candle, it may be necessary to wait for a 50% retrace before considering an entry. Of course, that all depends on your risk to reward requirements and preferred entry method.
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