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On November 1, I pointed out a key resistance area for AUDUSD.
The 0.6920 area is the top of a descending channel that extends from the December 2018 high.
It’s the same pattern we looked at back on July 24.
Here’s how things look from the weekly time frame:
The idea last week was that AUDUSD buyers needed to secure a daily close above that 0.6920 region to keep the rally alive.
But as you can see, that hasn’t happened, at least not yet.
The US dollar strengthened on Monday, which pushed several of the majors lower, including AUDUSD.
Monday’s selling pressure left a bearish engulfing day in its wake.
A candlestick pattern like this hints at exhaustion from buyers and could suggest a move lower from the Australian dollar.
However, keep in mind that support at 0.6880 is still intact.
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That means it’s going to take a daily close below 0.6880 to expose lower support levels including the area just above 0.6800.
Sellers are also going to have to contend with the October bullish engulfing candle.
Take a look at the monthly time frame to see what I’m referring to.
On top of all of that, we have an RBA rate decision and statement today at 10:30 pm EST.
That’s just a few hours away, so do anticipate an increase in volatility within the first six hours of Tuesday’s session.
As long as the pair is below that descending channel top, though, AUDUSD is vulnerable, in my opinion.
So as of now, a daily close below 0.6880 would expose 0.6800 while a close above the channel top, which is now closer to 0.6910, would turn our attention higher.
We’ll see if the RBA can trigger a move one way or the other.