AUD/USD Support Turned Resistance

Aha! It seems that the stars are aligned for an AUD/USD short so I jumped in at market after getting confirmation from fundamentals. A few minutes ago, China printed another decline in its HSBC flash manufacturing PMI, reflecting a deeper contraction in the industry. This could put AUD/USD back in selloff mode since a slowdown in Australia’s number one trading partner could weigh on export activity and overall growth.

au

As Big Pippin shared in today’s Chart Art, AUD/USD’s daily chart shows a trifecta of technical signals supporting a short bias: The pair is finding resistance at an area of interest around the .9000 major psychological level, which is close to the 38.2% Fib. Aside from that, there’s a shallow bearish divergence that’s starting to play out!

With that, I mustered the courage to short right after the release of Chinese PMI and set my stop 150 pips away, just above the 38.2% Fib. I’ll be aiming for the previous lows near .8650 but I’ll be ready to close early if market sentiment shifts. If you’re planning on joining me, make sure you check out our risk disclosure, okay?

Cheers,

Happy time

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  • West Atlas

    Nice idea on your short AUDUSD trade. Although AUDJPY has moved farther, I wonder if AUDUSD has more potential with FED talking less dovish. Shorted US Nasdaq futures myself, about the same time you put on your trade. Thanks for posting your trade idea!

    • Happy Pip

      And thanks for checking out my blog and for sharing your thoughts! I did choose AUD/USD over AUD/JPY because I thought it had more downside potential since the Fed is pushing through with the taper while the BOJ is ready to ease further if needed. How long are you planning to hold on to your Nasdaq futures short?

  • jabez

    You would be right to be short bias if AUD/USD does not break below 0.8900 level
    However if the Aussie break above 0.9110 and if stays above 0.890,
    I expect 0.92, and eventually 0.94.

    • Happy Pip

      Thanks for sharing your thoughts! Yep I think my trade idea would be invalidated if it does break above the .9100 area so I set my stop there. Did you trade this one?

  • Andre

    Great analyst am just mad i didnt take that trade

    • Happy Pip

      Thanks for the kind feedback! Well it looks like it’s stalling in the area of interest right now so there could still be a chance to catch a swing short, if you’re bearish on this pair of course.

  • Kevin

    Excuse me but I don’t think that you have drawn a bearish divergence. Bearish divergence would show the tops price higher and the slo sto would have lower highs indicating a slowing of momentum. What you have shown would be closer to what Mr Lane describes as a bull setup or reverse divergence and it may play out to be such.

  • mad4fx

    I’ve been short A$ for several months. This pair will continue to fall IMHO. My sights are on .8100. The RBA wants the AUD value down to boost exports. Until that sentiment changes I will continue to let this pair run. That’s my 2 pips. Happy trading 🙂

    • Happy Pip

      I agree! Just a little worried about the previous RBA statement where they ended their easing bias, but I think the latest set of data might force them to reconsider. Are you keeping this one open ahead of today’s RBA decision?

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  • girish

    what is idea now that it has reached 0.9032