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For today’s commentary, I want to call your attention to a pair that I’ve been watching closely since we moved into the next year – AUDUSD. The pair has been in a downtrend since September of last year, pausing for a brief period between October and November. In total, the pair has lost a massive 1,300 pips in just four months.
I was actually quite surprised to see the year-open gap fill today, expecting that it might go “unclosed” for quite some time. However I was not surprised to see the pair fall back below the .8090 level before the New York close.
This level provided a key inflection point in 2009 and again in 2010, acting as both support and resistance.
In the process of closing back below the .8090 level, the pair formed a large bearish pin bar. From here we can look lower to .7935. There is a chance we could even see .7700, however that’s going to be a bit harder to achieve, at least in the shorter term.
As a side note, we have FOMC within the next 24 hours, so do expect increased volatility across USD pairs.
Summary: Potential to trade yesterday’s bearish pin bar using either a conventional entry (break of pin bar nose) or a 50% entry. Key support comes in at .7935 and .7700.