After eight months of losses, AUDUSD looks as though it may be finding a bottom. The pair has been trading in a 380 pip range since March and is once again putting pressure on a key resistance level.
Although these past few months look more constructive for the pair, only a daily close above .7937 would signal a break of the range. Until that time we have to respect the range that has been carved out between .7560 and .7937.
The first level that comes into focus is .7842. With a daily close above this level we can begin watching for a retest as new support. A push higher would see the range high at .7937. Break that and we could see a larger rally develop that would test .8030 and possibly higher.
On the flip side, a daily close back below .7842 could trigger a move back to .7750 and possibly the range bottom at .7560.
Because these key levels are fairly close together we will need to move down to the 4 hour chart to find setups with a favorable risk to reward ratio.
Summary: Wait for a daily close above .7842 and then watch for bullish price action on a retest as new support. Key resistance comes in at .7937 and .8030. Alternatively, a daily close back below .7842 would have us looking lower to .7750 and possibly the range bottom at .7560.
GBPAUD continues to coil tighter as it comes into the final stages of this terminal pattern. The wedge that is best seen on the daily chart has been forming since mid February and looks ready to break any day now.
One intriguing aspect of the wedge pattern in general is that it isn’t a question of if the pattern will break but a question of when it will break. All wedges are terminal and therefore must eventually come to an end.
That said, it’s important for us to remain patient and not try to guess which way it will break but rather let the market make the first move. That move will come on a 4 hour close beyond wedge support or resistance.
Summary: Wait for a 4 hour close above wedge resistance or below wedge support respectively. A retest of the level combined with bullish or bearish price action will be our entry signal. Key levels and targets to be discussed as we move closer to the breakout.