On Tuesday we discussed how the AUDUSD rally was in jeopardy below 0.7620. This area is the intersection of former trend line support from the June 2nd low as well as several highs from last month.
It’s also the 23.6% Fibonacci retracement when measuring from the May low at 0.7328 to the June high at 0.7711.
Shortly after Tuesday’s commentary, the pair retested the new resistance area at 0.7620. Despite their best efforts, buyers were unable to push the price above the area on a 4-hour closing basis. This formed a bearish pin bar as noted in the chart below.
If you were watching for a sell signal at the time, that was it. For those who missed the entry, there will likely be additional opportunities on the way down as long as sellers maintain control.
The next key support area to keep an eye on comes in at 0.7565/70. This was Wednesday’s low as well as a key pivot between the 7th and 26th of June. Moreover, it’s the 38.2% Fibonacci retracement from the May low at 0.7328 to the June high at 0.7711.
Below 0.7565/70 we have the 0.7515 handle followed by 0.7475. And as long as sellers keep prices below 0.7620 on a daily closing basis, these downside targets will remain exposed.
Bear in mind that tomorrow (July 7th) hosts the latest non-farm payroll figure at 8:30 am EST. If you have any U.S. dollar exposure, you will want to keep this event on your calendar and perhaps take action beforehand to reduce or eliminate any risk.
With that said, the two currencies that are sometimes known to move irrespective of USD strength or lack thereof are the Australian dollar and New Zealand dollar. Look no further than today’s session where the AUDUSD and NZDUSD are down alongside the USD Index (DXY).
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