Just two days ago we watched the AUDUSD rip through the 0.7440 handle. Several lows mark the area including those between early July and mid-September. The level is also the August 2015 high.
As such, we discussed the idea that the pair could reach 0.7524 in the near-term. The level is outlined by several lows from November 11th through the 15th.
Fast forward to today, and we can see that the pair fell short by 26 pips. But that’s somewhat irrelevant considering we were only interested in a break below channel support.
Here’s the excerpt from Monday’s post:
However, keep in mind that with a channel like this, it’s prudent to wait for a close below support, which may or may not intersect with the 0.7440 handle. If it does, a break lower would be all the more convincing.
It seems the past 48 hours of price action has indeed formed in a way that aligns channel support with the 0.7440 horizontal level. The intersection makes any break lower more convincing and thus appealing.
However, keep in mind that until we get a 4-hour close below 0.7440 (or daily depending on your preference), the break is questionable. The next 4-hour close at 1 pm EST should be the deciding factor as to whether sellers have reclaimed the driver’s seat.
A close below the confluence of support at 0.7440 would expose the recent low near 0.7330. And in the absence of negating price action, my longer-term outlook remains in place.
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