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On March 18th, I discussed a potential bearish reversal pattern for AUDUSD.
The pair was coming off a relatively aggressive correction in late February that sent the market 300 pips lower in two days.
Last Thursday’s rejection from the 0.7800 area was enough for me to take a starter (short) position at 0.7790, as I mentioned to DPA members at the time.
I planned to add to my short following a daily close below the neckline near 0.7650.
I mentioned this in Sunday’s market forecast.
The Australian dollar’s 0.7624 close on Monday secured that breakdown.
I’ve added to my short position and will remain short the AUDUSD as long as the market remains below 0.7650 on a daily closing basis.
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Only a daily close above 0.7650 would negate the bearish outlook.
As for targets, the measured objective of this 400 pip pattern comes in at 0.7240.
However, as with everything in the markets, there are no guarantees.
While 0.7240 is the measured objective and a key horizontal level, it doesn’t mean AUDUSD will reach that level.
Other support areas include 0.7500 and 0.7400.
Both levels have been influential in recent months.
Disclosure: I hold an AUDUSD short position.