The AUDUSD pair has been in a downward channel since it broke down through support in early September last year. Since then, the bears have been firmly in control. So, taking the philosophy of not trying to pick the bottom (that’s just plain rude) and going with the trend, lets examine the chart to see if it gives us any clue as to some likely levels where supply could kick in again.
There are two levels on interest here:
- the nearest possible supply zone at 0.7875
- We have had previous support made at the 23rd of January
- A solid break followed by long bearish candles indicating strong supply there
- We’ve tested the level again and bears have come in defending
- The lows at 0.7720 from the 29th of January look like they had their stop orders run and the buyers picked up some orders there
- We have had a number of touches at the supply level, the supply could be weak now
- A break of this level would shake out the early shorts and weak hands
- the next possible supply zone is at 0.8020. This looks like a better place to make a stand
- We have had previous support – old lows become new highs
- We have a price retesting forming a hook structure and strong bearish candles following the retest on the 28th of January.
- Its near the 61.8 fib from the highs of the year.
- Its near the top of the channel
- Its a significant round number
We have a couple of news items this week which may give us the volatility to get back to the 80.
- Tuesday 9th February 12.30 am GMT- National Australia Bank Business Confidence
- Thursday 11 February 12.30 am GMT – Employment Change & Unemployment Rate from the Australian Bureau of Statistics
- Thursday 11 February 10.30 pm GMT – RBA Governor Stevens speaks
Remember though, markets will do their best to confound the majority. Keep it tight!