AUDUSD sellers have finally managed a close below trend line support. We first discussed the possibility of a breakdown on September 14th. Since that time the pair has bounced from support once and also encountered sellers on Wednesday at 0.8065.
It seems USD bulls are beginning to show their face following a lengthy hiatus. The USDJPY looks ready for further gains and the EURUSD is teetering on the edge of channel support.
With yesterday’s session close of 0.7930, the AUDUSD looks ready for a pullback. How low sellers will take the pair is anyone’s guess, but the August low at 0.7820 is the first target. A daily close below that would expose the February and March highs at 0.7730.
Note that 0.7730 is also the 50% retracement when measuring from the May low to the current September high. You’ll also notice that 0.7820 is the 38.2% Fibonacci retracement of the same range.
As long as the price remains below 0.8000 on a daily closing basis (5 pm EST), I will maintain a short-term bearish outlook. Only a daily close back above this area would negate that outlook.
I don’t intend on shorting the AUDUSD right away. Instead, I’ll wait for a retracement into the 0.7980 – 0.8000 area before considering an entry.
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