It’s no surprise that the AUDUSD challenged the confluence of support at 0.7608 yesterday. The pair looked weak during the last 48 hours of trade last week which is something I mentioned over the weekend.
The 0.7608 area is the intersection of trend line support from the December 2016 low and a horizontal level that’s been a factor since the January 24th high from earlier this year.
At the time of this writing, the pair is sitting just below these two levels ahead of an RBA rate decision. The event kicks off at 12:30 am EST, and unlike past decisions, the consensus as to what the bank will likely do is largely unsettled.
But given the last few weeks of price action, I’m only interested in a downside break. And unless the actual level is a bit lower than 0.7608, sellers appear to have done just that with yesterday’s close at 0.7604.
With that said, entering ahead of such a momentous event like a central bank rate decision is never a good idea. So unless you’re already short the AUDUSD from higher levels and therefore have a buffer to work with, it may be best to stay idle a while longer.
But structurally, the pair is one of the better looking right now which is why it remains at the top of my list.
The next key support comes in at the mid-March low of 0.7500. A close below that would expose the 0.7330 area. This is the 50% retracement of the 2016 range and is very near the wedge support that I mentioned last week.
Alternatively, a move higher from current levels would likely encounter sellers near 0.7670. A close above that would pave the way for a retest of wedge resistance near 0.7730.
Want to see how we are trading this setup? Click here to get lifetime access.