The AUDUSD finished Tuesday’s session well above a critical level. While the 0.7715 area has broken down somewhat in recent weeks, it remains a level that has directed price action since February 2015.
The pair is also coming off of the 0.7640 handle. This is a key level I mentioned on December 14.
Since that 600 pip rally stalled on January 26, the AUDUSD has carved what appears to be a falling wedge pattern. If you look closely, the upper level was established between the 26th and 31st of January.
For now, this is one to keep on my watchlist and nothing more. It’s going to take a daily close (using a New York close chart) above wedge resistance near 0.7760/70 to pique my interest.
If buyers do manage a breakout over the coming sessions, I’ll begin watching for a retest of the level as new support. Key resistance above that comes in at 0.7870/80 followed by 0.7970/80.
Alternatively, a rotation lower would likely encounter an influx of buying pressure at 0.7715. However, I wouldn’t be interested in buying such a pullback given that this falling wedge would still be limiting AUDUSD bulls.
Keep in mind that we could even see the pair drop back to 0.7640 before a bullish breakout materializes. There’s a trend line in that area that dates back to the 2016 low, making it an area to watch.