Daily Price Action
Shares

Price Action Setups – Next Move Lower for AUDUSD?

Shares

The markets continue to be fairly choppy and indecisive. Although we’ve seen some big moves this week, there doesn’t seem to be much follow through at the moment.

I wanted to preface today’s analysis with this observation for two reasons.

  1. Keep this in mind when position sizing for a trade…scaling back might not be a bad idea until we get clear direction
  2. Sometimes the best decision when deciding which trade setup to take is no decision…staying on the sidelines can be beneficial in these market conditions

On to today’s analysis…

AUDUSD wasn’t able to hold on to last night’s gains, dropping near Wednesday’s low. The pair continues to look bearish after breaking through trend line support on Tuesday.

From here I think we may see the pair consolidate some. This is typical any time you have a significant drop like we saw this past Tuesday. If price drops lower from here, the highs from March should come into play as support.

As a side note, the pair may also find some support in the .9170 area, which is represented by the highs from December of last year.

audusd daily chart

I mentioned in yesterday’s post that AUDJPY may run into resistance around the 94.50 level. Although the pair didn’t quite make it there, it did make it to 94.35 today before reversing sharply lower.

Two pin bars facing each other such as this is a classic indecision point in the market. My bias is still on the bearish side for AUDJPY considering the recent trend line break combined with today’s bearish pin bar.

From here we could see the highs from earlier this year come into play as support around the 92.70 level. This is obviously contingent on price breaking lower from here.

audjpy daily forex chart

GBPAUD was another one I featured yesterday. Although not the most bullish close, today’s price action showed a clear rejection of the 1.823 level.

The pair may continue to consolidate some before a possible push higher to the 1.84 level.

gbpaud daily chart

USDCAD is a pair that I traded a lot during the second half of last year. However I haven’t covered it much lately because it’s been forming a wedge pattern since March. This wedge was really a shorter-term down trend, and I didn’t dare think about a short position after coming off a 600 pip gain in a period of 4 weeks back in March.

At any rate, the pair does seem to have finally broken out of this formation, however we aren’t seeing much support from the bulls at this point.

I’m featuring USDCAD simply because we’ve all seen what this pair can do when it does finally break out. I don’t think we’ve seen the final upside yet for this pair. The question is, what level will cause the next push higher?

For that we have to turn to our price action strategies to signal any potential long position from here.

usdcad daily forex chart

USDCAD 4 hour chart shows this formation the best.

usdcad 4 hour chart

Leave a Comment:

2 comments
Cornel says

Hi Justin, please is the price action on eurjpy a valid trade setup?

Reply
    Justin Bennett says

    Hi Cornel, EURJPY is tricky. There was a bullish pin bar last week but a few things kept me out of the trade.

    1. No key level of support where the pin bar formed

    2. Resistance just above at 139.11

    3. The break of trend line support on May 8th

    The pair may see a pop higher from here, but I’m not overly anxious to get long the Euro. The Euro (and Pound for that matter) are looking pretty weak at the moment.

    Reply
Add Your Reply