Daily Price Action

AUDUSD: Remember This Pattern?


The AUDUSD just did something fairly unconventional in the world of technical analysis. Instead of testing a broken channel shortly after breaking out, the pair waited almost two weeks before doing so.

Not only that but it’s also retesting the former support level 40 pips above the ascending channel top. Typically we see a retest of this sort occur below the high of the channel. In the case of the AUDUSD, that would have been below the May 23rd and 25th highs near 0.7515.

We first discussed the 4-hour channel below on May 23rd.

Now, whether today’s retest at six-week highs is a sign of strength or just an anomaly is yet to be determined. Given the increase in FX volatility over the last few weeks we can’t and shouldn’t rule anything out.

I should also point out that the AUDUSD has had a tendency to move in short counter-trend bursts. Look no further than the price action since March of this year, so a sharp reversal here isn’t out of the question.

Moreover, at 130 pips so far this week buyers have stretched themselves quite thin, and it’s only Wednesday. That’s a range we’d commonly see from a five day week, not two and a half sessions.

Given the above, I’m skeptical as to how far buyers can push current prices before giving in to selling pressure. And if the latest 4-hour bearish rejection from former channel support is any indication, we may have just witnessed a near-term top at 0.7566.

Upcoming event risk includes Australia trade balance at 9:30 pm EST followed closely by the same from China.

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AUDUSD 4-hour chart

Leave a Comment:

Albert Sim says

Of course I remembered. How can we forgot the analysis from a pro!
Moreover, looking at the steep rising trend line built up from June 2nd and the current PA is intercepted at the lower trend line of the ascending channel, I am of the opinion that a pull-back is highly likely.
Forgive me if I am wrong. Cheers.

peter h oltersdorf says

How come you do not favor daily timeframe trading when it has been proven that that is the timeframe market makers and professional traders use. Everything below that is for AMATEURS
YES, I would like t have an answer

    Justin Bennett says

    Peter, take a look at the last seven commentaries before this one. I think you’ll find that I do favor the daily time frame more than any other. I even named the site “daily”priceaction.com.

      Albert O. says

      Awesome response Justin! Prices form fractals. If you zoom in, you’ll see that a daily candle is made up of 24 hourly candles, if you zoom out, you’ll see that a daily candle is one of 4 other daily candles that make up a weekly candle, and so on. There are certain information that you can get from intraday time-frames that you can’t from the daily time-frame. You can actually learn “when” the majority of buy and sell orders are coming into and out of the market in every trading day. “Why is this important” you might ask, well it tells you during which trading session traders traded the most and hints at what pair (or pairs) they might have traded (for FX, same thing for other asset classes), and other kinds of information. So, if you don’t look at ALL time-frames and say “nothing below the daily”, then you’re the AMATEUR.

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