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AUDUSD Buyers Attempt Reversal Above 0.7160

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

The AUDUSD seems to be getting its cues from GBPUSD. Last Friday, the Australian dollar closed below a confluence of support at 0.7160. I mentioned this breakdown over the weekend.

However, I gave a warning about Friday’s move. Here’s what I wrote on Sunday:

Just know that Friday’s breakdown could be a bear trap, so reducing your position size may not be a bad idea. And if the AUDUSD closes the day (using a New York close chart) back above 0.7160, it would negate the bearish outlook for the time being.

If you’ve followed me for a few weeks, this may feel familiar. The GBPUSD did the same thing in mid-August. The pair broke below descending channel support but then closed back above it on the 20th.

It took the pound a few weeks, but that mid-August false break eventually led to this past Monday’s close above channel resistance followed by this week’s rally.

What’s the connection here?

Both markets broke below a descending pattern. GBPUSD closed below descending channel support, and AUDUSD closed below falling wedge support.

Whenever you see a downside break of a descending pattern or an upside break of an ascending pattern, it’s usually best to stand aside. These are often referred to as bear and bull traps respectively.

Fast forward to today, and we can see that the AUDUSD is trading back above the 0.7160 area; though buyers are once again beginning to struggle.

For now, that 0.7160 area will likely attract buyers if tested. Just know that any buying here would be counter-trend, so you may want to reduce your position size or sit this one out altogether.

As for resistance, the 0.7235 level is the one to watch. I mentioned 0.7235 last Thursday, and yesterday’s high was 0.7229. That’s no coincidence.

Conviction has been a rare commodity lately across the entire currency market. We’ve seen many breakouts and even false breaks, but follow-through has been lacking, at least relatively speaking. We’ll see if that changes next week.

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AUDUSD falling wedge pattern

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19 comments
carl says

Justin, will the GBPUSD be entirely controlled by the bulls? Seeing it as a bearish flag pattern or I’m just looking it wronged?

Reply
    Justin Bennett says

    No market is ever controlled entirely by buyers or sellers.

    Reply
      carl says

      gotcha justin 🙂

      Reply
      carl says

      seems that bearish Pin Bar last Friday is a trap for GBPUSD

      Reply
        Justin Bennett says

        There were warning signs. Like the fact that the descending channel was inherently bullish. I’ve mentioned that a few times on this site as well as in the member’s area.

        Reply
          carl says

          thank you justin 🙂

          Reply
      carl says

      how to join your EXCLUSIVE MEMBER-ONLY FORUMS
      Find and Share Trade Setups in Real-Time (And Get Feedback Before You Take the Trade) justin?

      Reply
Joel says

Justin you are very correct.
The EURUSD also broke the 1.1650 resistance, what is next on this pair?

Reply
    Justin Bennett says

    Probably more sideways movement. That’s been the case since June.

    Reply
Yusuf Ahmad says

Another good one, you always feed us with good analysis.
I like.

Reply
    Justin Bennett says

    Thanks, Yusuf. Glad you’re enjoying it.

    Reply
Sunray says

I have been following you… you clearly said AU may follow GU… and the reversal was just as you said. I didn’t trade AU this week.. i will look for good set up next week. AU look like breaking the year trendline for a buy. Justin, thanks for the great work.

Reply
    Justin Bennett says

    You’re welcome. No reason to buy just yet. Buyers need to do a lot more before I even consider buying. That’s why I used the word “attempt” in the post’s title.

    Reply
      Pierre Mifsud says

      AUDUSD seems to work perfectly at least for me!….It is checking back down to a price reversal zone of 0.7092…This gives it a better buy entry

      Reply
Sam says

Mr Spot On (Justin)

The trade wars between the US and China are hurting AUD.

Thanks Justin!

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Nhlaks says

Great work Justin, very informative. I would like to know about the parameters of your moving averages..they seem to give early signals as well

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