Daily Price Action
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AUDUSD Needs a Catalyst; Will It Be the RBA?

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With the next RBA (Reserve Bank of Australia) rate decision and statement just around the corner, it’s a good time to refresh our memory of the AUDUSD technical landscape.

And just so there are no false hopes, the AUDUSD technicals haven’t been the most exhilarating.

A view of the price action since late last year shows indecision.

The pair has gone nowhere in the last six months apart from the January 3rd flash crash which didn’t last long.

It’s become clear the Australian dollar needs a catalyst to end the slumber.

However, despite the uneventful price action, there are two notable technical events to consider here.

The first was the close above trend line resistance on November 1, 2018.

Although AUDUSD bulls struggled shortly after breaking out, that was a key development as it broke a ten-month downtrend.

It’s also why the January 3rd flash crash encountered support where it did.

The second and more pressing development is the descending channel you see below.

We’ve studied this pattern a few times in recent weeks. But as the chart illustrates, buyers have yet to make their move.

It does appear that the AUDUSD has carved a base over the last few months that buyers could use to take prices higher.

That said, it’s going to come down to this descending channel in my opinion.

Until buyers can clear channel resistance near 0.7180, AUDUSD will remain under pressure.

But if buyers can take out that 0.7180 resistance level, it will be off to the races.

Key resistance above it includes the 0.7300 area followed by 0.7460.

And it just so happens that we have the ideal catalyst early in Tuesday’s session in the form of an RBA rate decision and statement.

I don’t trade the news, but I do use the market’s response (price action) to catalysts to determine a market’s likely path forward.

The upcoming RBA events at 11:30 pm EST could be just what the pair needs to break free.

Then again, an unfavorable response could take AUDUSD right back to the 0.7000 handle or perhaps even lower.

Although I’m still neutral here, I would prefer to buy AUDUSD on a break of channel resistance given the blue skies that lie above it. But that’s just me.

For now, all eyes are on the market’s response to the RBA.

IMPORTANT: I use New York close charts so that each day closes at 5 pm EST.

Click Here to get access to the same charts I use.

AUDUSD breakout and channel

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10 comments
Justin Bennett says

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Adebayo saheed says

Thanks

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    Justin Bennett says

    You’re welcome.

    Reply
Isaac morah says

Hy Justin nice setup, but I have a question the rest of your trend lines do have at least three touches which I believe is confirms a diagonal resistance or support. Are there special conditions where one can use two touches ? What are your recommendations. Thanks

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    Justin Bennett says

    Well, you need at least two points of contact to draw a trend line. But the more influence it has, the better.

    Reply
Tycoon says

Thanks for this. I sent you a message to join your WhatsApp group and you haven’t added me. (edited out) is my line. Please add me up. Thanks

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    Justin Bennett says

    You’re welcome.

    First, I don’t think you want your number shown to thousands of people around the world, so I’ve removed it from your comment.

    Second, you need to send the message via WhatsApp, not as a text message to my phone.

    Reply
Wole says

Nice setup, fingers crossed till the outcome of the RBA. Thanks for the heads up

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    Justin Bennett says

    There’s no need to cross your fingers and hope for an outcome. Doing that with money on the line is gambling, not trading.

    Sit back and let me the market do what it wants. There probably won’t be anything to do here for at least a few more days.

    Reply
LOU says

NICE ONE BRO

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