AUDUSD continued its post-Brexit rally last week, furthering this year’s gains by an additional 75 pips. But despite this recent strength, the broader picture remains weighted to the downside via the descending pattern that extends from the April 2013 high.
The weekly chart illustrates the price structure in question.
Within the descending channel above we have a smaller ascending channel, which most often represents a continuation of the prevailing trend. Of course, whether AUDUSD abides by the standard is yet to be seen.
However, there is also another trend line on the weekly chart that could offer some insight into where the pair may be heading in the near-term. The trend line that extends from the September 2014 high (shown in the chart below) was responsible for capping the pre-Brexit advance and could do so again over the coming sessions.
On the other hand, a break above this level could trigger further gains that would retest the confluence of resistance at 0.7834. This area is the intersection of the current 2016 high and channel resistance that extends from the April 2013 high.
What you decide to do from here, if anything, depends on your overall style of trading and directional bias for the pair. Personally, I prefer to wait for a sell signal from higher ground as long as the thirty-nine-month descending structure is intact.
Alternatively, a close below ascending channel support that extends from the current 2016 low at 0.6826 would offer an opportunity that is just as enticing from a risk to reward perspective. It would also provide a higher degree of conviction as it would call for selling weakness rather than selling strength.
As noted over the weekend, Australia employment figures are scheduled for release this Wednesday at 9:30 pm EST. Perhaps the results will help shed some light on the Aussie’s intended future direction.
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