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AUDUSD Confirms Suspicion: Keep 0.7160 on Your Radar

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Over the weekend we discussed the AUDUSD and how the 0.7160 handle is the line in the sand between buyers and sellers. This area first came under fire on December 23rd and continued to serve as support throughout last week.

Although Friday’s session managed a 0.7245 print, the selloff into the weekend left a bearish pin bar in its wake. The candlestick pattern signaled the likelihood of further losses.

But with the 0.7160 area just 40 pips below last week’s close, there wasn’t enough room for a favorable entry. Also, the lack of liquidity due to the holiday season adds a risk factor that would otherwise be a non-issue.

With that said, today’s bounce confirms our suspicion that 0.7160 is indeed worth keeping on our radar. Today’s low (thus far) is 0.7163, and shortly after testing the area, the pair bounced 25 pips.

While I don’t expect full liquidity to come back until sometime next week, we should start to see volume pick up from January 3rd onward as banks and other institutions reopen for business.

As for the AUDUSD, I’ll be interested to see if sellers can secure a daily close below 0.7160. Such a break would open the door for a move toward the next support at 0.7065.

However, given the broader downtrend that’s showing no signs of stopping, I see no reason why the pair won’t eventually challenge last year’s low at 0.6826.

On the flip side, a move higher from current levels would likely encounter offers in the 0.7240 region.

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AUDUSD consolidation

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