Daily Price Action
Shares

AUDUSD Looks to 0.7380 for Direction

Shares

Despite having surrendered an extraordinary 380 pips in the first week of May, AUDUSD has been relatively resilient in June. The pair managed to find a bid at the 0.7160 handle late last month and as of Wednesday had regained much of the lost ground.

However, that rally was short-lived as the Aussie stumbled after reaching the 0.7490 resistance level, forming a bearish engulfing day in the process.

On top of that, Friday’s session challenged the 0.7380 level as new support. This area had previously acted as resistance in October and December of last year.

But here’s the real question – did AUDUSD respect the 0.7380 handle as new support or did sellers win the battle on Friday?

We’ll tackle that question shortly, but let’s first review the weekly chart, which on its own doesn’t inspire much confidence if you’re a potential buyer.

AUDUSD weekly bearish rejection candle

Now, back to the central question about whether the pair held its ground on Friday or whether the level cracked under pressure.

With a weekly close of 0.7377, it’s too close to call. Luckily, we don’t have to make that determination just yet. One of the many advantages to trading from the higher time frames is being able to use daily and weekly closing prices as confirmation.

Therefore, a daily close below 0.7380 would signal that the pair did, in fact, fail to hold the level as new support last week. In which case further weakness toward channel support would be the likely outcome.

If on the other hand, the pair closes the day above 0.7380, we could see a move back toward the next resistance level at 0.7490.

Regardless of today’s outcome, keep in mind that the FOMC is set to make a key rate decision this Wednesday at 2 pm EST, which all but guarantees a volatile session for the US dollar.

Want to see how we are trading this setup? Click here to get lifetime access.

AUDUSD support and resistance levels

Leave a Comment: