We are at an interesting support level on the AUDUSD pair – looking at the longer term chart below.
Some observations from the above chart for a bullish thesis:
- We are near a long term ascending trend line – most market participants in this pair are aware of this trend line.
- We are at a symmetrical distance comparable to the drop in this pair in 2008.
- We are close to the 61.8 fibonacci level.
- We have had demand at this level before.
Drilling down to the 4 hour chart on this pair, we can see that we have a level in play where supply has turned into demand.
For now, this pair has broken, and retested, the short term descending trend line and is holding, for now, above a previous supply level. We also have an earlier bear trap so there could be some remorseful shorts caught who might cover on retests of the lows.
There is a bearish thesis to be made as well. Things may get sticky for the bulls at about 0.7540 – we have a confluence of the half way back, the 61.8 fib and previous demand level (and old demand levels can become new supply points). We are also touching a descending trend line from the May highs and this may induce some selling.
What do our players think of this market?
Right now, we have a net bearish consensus on the AUDUSD. Let’s see if the wisdom of the crowd is right this week! We will post any changes to the opinion of the crowd.
AUDUSD – risk on tap this week
It has been a busy week for this pair risk wise and the remainder of the week has risk on tap with Non Farm Payroll at the end of the week and a number of events for the AUD. Expect some volatility.
- Aug 5 – ISM Non-Manufacturing PMI
- Aug 6 – Employment Change and Unemployment Rate for Australia
- Aug 7 – RBA Monetary Policy Statement
- Aug 7 – Non-Farm Employment Change
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