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AUDUSD Key Resistance Challenged Following Upbeat Aussie Data

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Following the confirmation of the upward sloping flag in early May, AUDUSD slid 420 pips before eventually finding support at 0.7140. Since that time the pair has rallied 115 pips off of recent lows.

With this surge came several emails asking whether I’m bullish or bearish on the Australian dollar.

My answer – neither.

But there is one level that could determine the immediate path forward for the pair.

The 0.7242 handle capped every advance in February and was also the weekly open on May 16th. The level has subsequently acted as resistance on numerous occasions beginning on May 19th.

Today’s session is testing this level once again following an upbeat building approvals figure out of Australia. However, as is the case with most of the price action I trade, nothing is confirmed until the current session closes at 5 pm EST.

A daily close above 0.7242 would likely extend the current rally toward the next resistance level at 0.7380. Alternatively, a close below 0.7242 would leave the pair vulnerable to further losses.

Keep in mind that Australia reports Q1 GDP at 9:30 pm EST followed by the Caixin Manufacturing PMI out of China at 9:45 pm EST. Both of these events are likely to trigger an increase in volatility for the Australian dollar.

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AUDUSD 7242 in focus following upbeat building approvals

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2 comments
Michael says

Hello, thank you for all the great guidance on this site. I’m very new struggling to become profitable. So far just seem to be breaking even. With this particular setup, I saw that it did not close above 0.7242 that day, and just a few pips above the next day. Not a clear convincing break, and it appeared to my admittedly untrained eyes to form a pin bar in the process. A pin bar at resistance in the direction of the prevailing trend seemed ideal to me. I went short the next day after it crossed the pin bar nose and was ahead about 20 pips when it exploded in the opposite direction the next day. Was there anything I missed that should have warned me not to make that trade? Just bad luck with the terrible USD reports? I’m finding it hard to learn the difference between bad luck and bad decision making.

Reply
    Justin Bennett says

    Michael, it wasn’t a bearish pin bar, at least not according to my chart. Also, the best continuation signals are those that form after a larger pullback (swing high/low).

    Reply
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