Like equities, the AUDUSD has been overly active lately but has failed to make any progress one way or the other. The pair has been stuck in a 300 pip range since August and spurred on by channel resistance that extends from the April 2013 high.
But despite the range-bound price action, the pair has offered several opportunities to get short from the previously mentioned three-year resistance level.
The first came in the form of a bearish engulfing/pin bar on September 8th. After giving up an additional 215 pips following the signal, the pair found support at the July lows near 0.7440.
The second came one week ago on September 29th in the form of a bearish engulfing pattern. Although buyers pushed the limits at the beginning of October, they didn’t quite manage to negate the September 29th reversal signal.
If that weren’t enough, we just had yet another bearish pattern form on October 4th. So although the pair has struggled to break the current range, my bias remains tilted to the downside while channel resistance holds up on a daily closing basis.
As I mentioned over the weekend, the 0.7565 handle was likely to attract bids on a move lower, which is what we’re seeing transpire today. Below that we have ascending channel support that extends from the current 2016 low at 0.6827.
I’m short from 0.7640 with the intention of adding to the position on the way down. See this post to find out where I believe the AUDUSD is likely to trade over the coming weeks and months.
Keep in mind that as long as channel support is intact near 0.7500, we are likely to see the current range persist.
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