The AUDUSD has drifted higher for seven straight weeks. We have to travel back to the period between June and July of 2016 to find a comparable weekly win streak, albeit a less significant one.
But nothing lasts forever, and what goes up must come down. However, the last thing you want to do is sell into an uptrend without just cause.
It’s also important to identify the broader technical theme because while a 4-hour chart can be nice to look at, it doesn’t paint a complete picture.
For that, we turn to the weekly time frame.
As you can see, the AUDUSD has been in a steady uptrend since the beginning of 2016. Though I would argue that it’s corrective in appearance relative to the multi-year downtrend that started in 2011.
While the pair still has room to run, overhead resistance is substantial. At the moment that resistance level is 0.8110 with a close above that exposing 0.8160.
For those who are more interested in playing the weekly range above, there is a 4-hour ascending channel that could prove useful.
There’s no indication of it yet, but a close below channel support in the chart below could signal a turn lower. The first area of interest following a break lower would be 0.8020 followed by 0.7935.
I don’t usually include this many support levels on a chart, but I believe that ignoring any one of them would be a mistake.
I’m not doing anything here just yet. The AUDUSD may very well have another 100 pips left in this seven-week rally. In which case, traders can watch for a close above 0.8110 which would likely attract another round of buyers.
Alternatively, a close below channel support would begin to put pressure on longs. There’s no telling when or where it might occur, but I do believe that’s the bigger play here given the two-year range shown above.
One event that could trigger a break one way or the other is today’s Fed rate decision and statement at 2 pm EST. Keep in mind that this Friday also features non-farm payrolls, which could shake things up for the U.S. dollar.