We’ve discussed the AUDUSD a few times in recent weeks. Just this past weekend I noted how the pair appeared to have closed Friday below the 61.8% Fibonacci retracement from the December 2016 low to the current 2017 high.
However, it was unclear at the time whether or not sellers maintained control into the weekend. Despite the bearish rejection candle on Friday, the key level in question was too ambiguous to justify a position.
It’s a good thing we waited. Buyers have now taken out the May 12th high after the pair gapped up to start the new week.
Although Australian dollar bulls have been in control so far today, they’ve had trouble overcoming a level I mentioned on May 12th. The 0.7440 level served as support on April 27th as well as during July and September of last year.
What’s the significance of today’s rejection?
Not much right now but if buyers continue to lose ground into today’s close, it could signal the beginning of the next leg down. I’m still of the opinion that a retest of 0.7300/10 is in the cards which could subsequently trigger a larger breakdown toward 0.7160.
Whether or not 0.7440 will continue to hold as resistance this week is anyone’s guess. But if sellers want to regain control, we’ll need to see a move back toward the 0.7380 area before today’s close at 5 pm EST.
Otherwise, we could see the 0.7440 resistance level come under pressure again later this week. I’m short from 0.7440 and will decide whether to continue to hold based on today’s close.
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