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The AUDUSD reached a key resistance area on Thursday.
I first wrote about this descending channel that extends from the December 2018 high on July 24.
At the time, we were trading the breakdown below 0.6960 with a target of 0.6750.
I also wrote about the potential for a higher AUDUSD in the October 5 Saturday Forex forecast.
Now that the pair is trading just below resistance, you might think that now is a good time to sell.
However, I’m not interested in selling AUDUSD at the moment.
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While we could see a short-term move lower, October’s bullish engulfing candle hints at a push higher.
The AUDUSD is also above the 0.6860/80 area I pointed out on October 21.
Notice how buyers have stepped in at 0.6880 over the last 48 hours.
That said, it’s still going to take a daily close above the channel top near 0.6920 to keep the rally alive.
If buyers can secure a close above that 0.6920 region, we could see the Australian dollar trend higher toward 0.7030.
It’s difficult to see on the daily time frame, but a view of the weekly chart shows how the 0.7030 area has influenced the AUDUSD since October 2018.
The 0.7030 level is also the 50% retracement of the descending channel that began last December.
Alternatively, a daily close below 0.6860/80 could trigger a move lower, perhaps into the next key support at 0.6810.