Daily Price Action
Shares

AUDUSD Reacts to 2016 Trend Line

Shares

Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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

The AUDUSD is in the process of testing former multi-year trend line support as new resistance. The level extends from the 2016 low and connects with the December 2016/January 2017 low as well as the December low from last year.

I mentioned the April 23 breakdown one day later in this post. After spending the last six weeks staying (mostly) below the 0.7580 handle, buyers have made their way back to the multi-year trend line near 0.7670/80. This time it’s being tested as resistance.

AUDUSD weekly time frame

It’s unclear at the moment what type of bearish price action we’ll see from the area if any. However, as long as it holds as resistance on a daily closing basis (using a New York close chart which you can get here), I’ll stay bearish the AUDUSD.

Key support comes in at 0.7580 followed by the May low at 0.7410. Alternatively, a daily close above this trend line would negate or at least delay the bearish outlook.

That said, you may be aware of my rule about buying upside breaks of ascending levels or downside breaks of descending ones. Essentially, I avoid doing either one.

Why is that?

It’s because a downside break of an ascending level like the one that occurred on April 23 is considered bearish. The market was indicating that buyers were exhausted, and breaks of multi-year levels like this one don’t usually play out in a matter of weeks.

In other words, the bigger picture still suggests that buyers are exhausted. Yes, we have a short-term uptrend, but as long as the 2016 trend line holds as resistance, I’ll approach this as a shift in momentum and continuation of the long-term downtrend that started in 2011.

Want to Learn How to Swing Trade?

Click Here to Get The Ultimate Forex Swing Trading Cheat Sheet

AUDUSD daily time frame

Leave a Comment:

12 comments
Deshy says

Finally others pairs besides the usually(GBP/USD,EUR/USD,etc)….thanx

Reply
kunle says

I’m watching this pair keenly too. Thanks for the update.

Reply
    Justin Bennett says

    You’re welcome.

    Reply
28 says

“It’s unclear at the moment what type of bearish price action we’ll see from the area if any”… This statement sounds like call for a lil’ bit of patience while anticipating sell entry signals…

Reply
    Justin Bennett says

    Always! That doesn’t mean a short at 0.7670 wasn’t justified, but a little patience never hurts.

    Reply
fpa says

The bearish trend line that touches the higher highs of 2018 from 16-2-2018 onwards, acts as resistance line and creates a confluence point at yesterday’s high with the trend line referred by Justin.

Reply
Andrea says

Retest of trendline isn’t for me. I went short today in a similar situation with Eur/Nzd but it just didn t work sigh

Reply
Al says

Yes. There’s an awful lot of resistance around .7650 minor psychological level and gold’s looking quite bearish too.

Reply
Gfire says

Look at 4hr

Reply
mainframe says

Thanks for this analysis.

Reply
Manakale says

I have monitored your analysis and they are true and require one to be patient.

Reply
Noni says

What are you MOVING AVERAGE SETTINGS

Reply
Add Your Reply