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AUDUSD is bouncing today from our target at 0.6750.
I first wrote about the short idea on July 24th. At the time, the pair was still trading above ascending channel support at 0.6960.
However, given the broader descending channel, a break lower seemed all but guaranteed.
I mentioned the 0.6750 target again on August 1st following the break below 0.6830.
The AUDUSD reached a low of 0.6748 yesterday and is bouncing from today’s low of 0.6749.
If this larger descending channel holds up, we could see AUDUSD continue to correct higher over the coming sessions.
That said, the longer-term downtrend is very much intact.
In fact, since January of last year, the AUDUSD has lost more than 1,300 pips.
I don’t want to fight that kind of bearish momentum.
So with that in mind, I prefer watching for selling opportunities as long as this broader descending channel is in play.
One level that could produce an opportunity is 0.6830.
It supported the pair on June 18th and is also the 2016 low.
If we don’t get any bearish price action there, I will look to the 0.6900 region.
Notice how 0.6900 served as a pivot during the second half of May. It also attracted buyers on July 10th.
Keep in mind that we may not see a retest of 0.6900 or even 0.6830.
While I would prefer to sell AUDUSD at higher prices, the pair may have other plans, which means I need to stay flexible in my approach.
For instance, there’s a chance this market breaks 0.6750 support sooner than expected.
That would likely trigger an abrupt selloff toward the next key support at 0.6660.
For now, though, I’m going to stick with the notion that AUDUSD needs to unwind higher before sellers are ready for the next leg down.