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Yesterday’s price action saw a lot of big breaks on the heels of the ECB’s decision. One of the largest breaks of the day, if not the largest, was AUDUSD.
The pair had previously been moving inside of an ascending channel since late 2014. After making three separate touches off of support, the pair broke below it on a massive 155 pip drop on January 21st.
I should also note that this break of channel support formed a bearish outside day, giving further confluence to the break and weighing the pair to the downside.
The pair then retested former channel support yesterday, which acted as new resistance. In the process of retesting the level, the market formed a bearish 4 hour pin bar. This setup was announced to Daily Price Action members and non-members alike.
The pair is now 95 pips lower at the time of this writing, which gave those who took this setup a chance to make a quick 4R. But it isn’t over just yet for the bears…
During the 95 pip fall, AUDUSD took out a five year low. Not only did it take out the low of .8035, it managed a daily close 10 pips below it. This leaves us watching for bearish price action on a retest as new resistance. For those who traded the initial pin bar setup, this is also an area to potentially add to your existing position.
Looking lower, we could find buyers around the .7936 area, however I do like this market much lower. A long-term objective of .7500 isn’t out of the question. But for now we will take what we can get from the shorter-term levels.
Summary: Wait for a retest of .8035 and then watch for bearish price action. Key near-term support comes in at .7936.