The AUDUSD just retested a level that dates back to April of last year. The trend line that extends from the 2016 high at 0.7834 capped two previous advances, not including the November 2016 selloff.
The weekly chart below illustrates the significance of this trend line.
This is the same level that triggered the bearish signal on March 21st. In that instance, the pair eventually found support on May 9th but not before losing 420 pips.
Today’s high of 0.7711 put buyers just above the key level on an intraday basis. But as you may well know, the daily (and weekly in this case) close at 5 pm EST is much more telling than any 1-hour or even 4-hour close.
From here I’ll be watching for a bearish signal just below the 0.7700 handle. Key support comes in at 0.7620, 0.7565 and 0.7520.
On the flip side, a daily close above 0.7700 would feed the bullish scenario and expose the February and March highs near 0.7740/50. A break above that would pave the way for a retest of the 2016 high at 0.7834.
I’m going to hold off on making a decision here until next week. That way I’ll have a daily and weekly close to work with and also avoid taking on exposure before the weekend.
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