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AUDUSD Offered at 0.7440 as Sellers Remain in Control

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After a volatile and often messy few weeks beginning in mid-October, the AUDUSD seems to be playing nice again. The pair found support this week at 0.7330, a level I’ve mentioned several times in recent months.

Furthermore, today’s high is 0.7444, which is just four pips beyond the 0.7440 handle that I pointed out over the weekend. So after a couple of false breaks in October and November, it seems the pair is back to respecting the technicals.

The selloff that occurred in the wake of today’s U.S. durable goods orders and unemployment claims has tapered some over the last few hours. And while the 0.7440 level is still key resistance, I’m also keeping 0.7412 on my radar.

The 1-hour chart below illustrates how this area has influences prices over the past 24 hours.

audusd-1-hour-chart

But as is the case with most of the trade ideas we discuss, the daily time frame is all you really need. From here traders can watch for selling opportunities while below 0.7440 on a daily closing basis.

In the event the pair doesn’t reach back that high, the next opportunity would materialize on a close below 0.7330. Such a move would expose the May lows at 0.7150, offering traders 180 pips of real estate to work with.

As a final side note, it’s my view that the Australian dollar may begin to outpace the kiwi for the foreseeable future. This idea comes as a result of the (potential) inverse head and shoulders that started forming in June.

With this in mind, it’s important to weigh your options if deciding between shorting the Australian dollar or the New Zealand dollar. I tend to avoid trading both at the same time due to the positive correlation often shared by the two currencies.

See yesterday’s commentary for more details on the NZDUSD.

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audusd-range

Leave a Comment:

2 comments
Pau says

Positive correlation for AUDUSD and NZDUSD means that they tend to have similar movement, right? Then isn’t it logical to short both?

Reply
    Justin Bennett says

    Pau, yes, correct. You could, but you’d also be doubling your risk. That’s the point I was making.

    Reply
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