The AUDUSD has been in rally mode since coming off the 0.7370 handle on June 2nd. The pair has rallied 260 pips and just last week took out the 0.7565 handle on the back of weaker than expected US CPI and retail sales.
However, since the June 14th high the pair has struggled to make higher highs. Also, the long upper wicks (daily chart) over the past few sessions suggest an increase in selling pressure above 0.7600.
If we drill down to the 4-hour chart, it appears sellers have now breached a trend line that extends from the June 2nd low. Of course, those who need additional confirmation can wait for the 1 pm EST close or even the session close at 5 pm EST before considering an entry.
The alleged break from this trend line exposes the post-FOMC lows from last week at 0.7565. A close below that would take us to the May 23/25 highs at 0.7515.
Keep in mind that price has been somewhat erratic lately thus waiting for additional confirmation isn’t a bad idea. This is particularly true when it comes to breaks that occur on the intraday charts.
Also, know that the uptrend that began on June 2nd is still intact as of this writing. Only a close below 0.7565 would indicate a reversal is underway. So what we’re seeing right now via the 4-hour chart below is just an early warning that buyers could be tiring.
With that said, as long as the 0.7605 area holds as new resistance we could see this two-week rally begin to unwind. Key support comes in at 0.7565 followed by 0.7515 and 0.7475.
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