Good morning Traders!
I have a confession to make…it seems I can’t stay away from the charts for very long! While on my recent sunny holiday I kept a keen eye on the markets and couldn’t resist a few shining setups as the US dollar crosses pulled back last week. So today I want to continue to look at US dollar crosses, specifically AUDUSD, as we are due an interest rate decision by the RBA, where the market is expecting a hike of 0.25% to 3.6%
AUDUSD has found Support at the strong level of 0.67, which is also a psychological round number level. If we take a look at the weekly chart, we can see that the market has pulled back a 100% of the latest move to the previous swing Higher High, while this is a bearish sign as it shows the strength of the sellers, it does not mean that the buyers are done, especially since they pushed slightly higher then the August 22 highs. Therefore I do expect a pullback to release some of the recent strong selling pressure.
If we take a look at the daily chart, we can see a newly formed downtrend, however, the several rejection candles of the 0.67 shows that there are still buyers at that area, and we may need to pullback further. Taking a look at the levels above, and we can note the breakout level at around the 0.685 as an area of interest, and while it may be viewed as a deeper pullback, it will not be breaking the downtrend on the Daily chart.
Looking at the Monthly chart, and we can see the importance of the 0.67 area, if the market will close decisively below this level, it will also be confirming the next swing Lower High on the Monthly timeframe. However, if the market will be finding support once again at this level, this could be creating a potential Higher Low at the 0.67 area.
My preferred scenario is for the market to pullback to the 0.685 area and show rollover signs around there. However, if the RBA decision will turn the AUDUSD bearish and break through the 0.67, I’ll be holding on to see how far below the level the marked has reached, and how decisive was the break, before considering a potential entry.