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AUDUSD Reacts to Confluence of Support at 0.7160

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

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Last weekend I commented on how AUDUSD selling pressure may be limited below 0.7160. It’s the support level of a falling wedge pattern that has been developing since July.

However, the 0.7160 support area has more going for it than that. It’s also the location of two prominent swing lows. The first occurred at the end of May 2016 and the other in late December.

AUDUSD weekly time frame

That makes 0.7160 a confluence of support. It’s the intersection of a key horizontal level and falling wedge support.

I don’t see much in the way of a buy signal though, at least not yet. This week has been relatively quiet across the entire currency market, probably due to Monday’s U.S. and Canada holidays.

That said, I certainly wouldn’t suggest selling at current levels. It’s why I mentioned I’d only be watching for bullish price action from 0.7160/90 in Sunday’s forecast.

If I were forced to choose a directional bias, I’d be bullish. Yes, the pair is still trending lower, but the narrowing price action over the last few months combined with the 0.7160 support area prevents me from being bearish moving forward.

I do think the breakdown we witnessed in April was a significant turning point for the pair. That snapped a two-year rally and put the AUDUSD under severe selling pressure during the first half of June. See link above.

But as we all know, a market doesn’t move in a straight line. As long as 0.7160 support holds on a daily closing basis (New York 5 pm EST), there’s reason to suspect a bounce. Perhaps not this week, but it is a scenario that demands respect in my opinion.

Key resistance comes in at the wedge ceiling near 0.7320.  There is also a good reason to keep the 0.7235 horizontal level on your chart.

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AUDUSD daily time frame

Leave a Comment:

9 comments
Nkosekhaya Zatu says

This currency and USDCAD I will patiently wait for them, lot of moola can be made. Patience is the key right now, Thanks Justin

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Amin says

What do you think about USDCAD and EURUSD Justin? I just see USDCAD complited it’s consolidation after breaking key resistance level. I think it will be on a rally for next few weeks and EURUSD will be on it’s way to 1.1300 level. What’s your opinion justin?

Reply
    Justin Bennett says

    Not much has changed since my EURUSD commentary on Sunday or my USDCAD post from two days ago.

    Reply
Sera says

👍 I entered usdcad and am already making some doo…ty

Reply
Detlef says

Danke Justin, immer wieder sehr sehr gute Analysen !!!!!!!!! Benutzt Du ausschließlich 4h Chart zum Traden ?

Reply
Stephen says

Thanks Mr Justin, you’re really an eye opener. Now I can see what I have been missing all this while.
Please, do you consider currency correlation when making your trading decisions?

Reply
SyntaxFx says

Wouldn’t the short bias remain until the RBA raises the cash rate and/or the downtrend shows a reversal pattern?

Reply
    Justin Bennett says

    I don’t care about the RBA, but as I’ve mentioned a few times, a wedge pattern like this isn’t confirmed until the market closes above resistance. The pair has a long way to go before that happens.

    Reply
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