Yesterday I pointed out how AUDUSD buyers needed a daily close above 0.7165.
That’s the location of former descending channel resistance.
As we know, old resistance becomes new support. And that’s exactly what has happened with AUDUSD so far this week.
Buyers cleared channel resistance on Friday. It was close, but Friday’s final print of 0.7172 managed to break the level by just a couple of pips.
Because it was such a marginal break, I was interested in seeing how the pair would behave above 0.7170 this week.
Monday’s inside bar was a good start.
It proved that AUDUSD bulls were intent on keeping their heads above water.
Then came Tuesday’s bullish pin bar.
The fact that Tuesday’s session closed inside of Monday’s range (which was an inside bar) gave us an inside bar pin bar combination.
It’s a rare candlestick pattern, but the inside bar pin bar combo can be incredibly effective when utilized correctly.
Wednesday’s session also allowed traders to enter on a 50% retracement of Tuesday’s range.
But buyers aren’t out of the woods just yet.
Not only are they fighting a downtrend that began in January of last year, but they are also battling recent highs near the 0.7200 handle.
Since the selloff on February 6th, AUDUSD hasn’t been able to extend gains above the 0.7200 region.
You can see that in the February 21st selloff from 0.7206.
The same thing happened last Friday at 0.7192.
That makes this 0.7200 area the next key test for AUDUSD bulls.
If they can clear it on a daily closing basis, there isn’t much standing in the way of the year-to-date high just below 0.7300.
I still like the 0.7330 resistance area, though. A view of the weekly time frame between June and November of last year illustrates why.
But first, AUDUSD needs to get past 0.7200 resistance on a daily closing basis.
Key support remains former channel resistance (new support) which now comes in near 0.7160.
I remain long AUDUSD from 0.7168 which I also announced in the member’s area.