Back on Monday, we were looking to short at the channel’s resistance area or at the 0.7220 handle while gunning for the channel’s support area about 80 pips lower. Well, as y’all can see the pair did find resistance at 0.7220, but it blew right past the channel’s support area at 0.7160, as well as the key area of interest at 0.7120. This is a sign that the trend may be switching to a bearish one. By the way, if you were able to ride the pair all the way down, then congratulations on your 170+ pips.
Having said that, the pair has now reached the 0.7050 minor psychological level, a price area with significant market interest, even on the higher time frames. In addition, stochastic is beginning to point up after having reached oversold territory. There is therefore a chance that the pair may start pulling back. And should a pullback occur, then the most likely pullback area would be at the 32.8% Fibonacci retracement level, since it lines up with the area of interest at 0.7120. Of course, the 50% and 61.8% retracement levels are also both valid, since they’re close to the 0.7160 handle.
That there channel setup also comes from Monday’s intraday forex charts update. And as y’all can clearly see, the pair also staged a breakout. Only this time, it’s to the topside. Unfortunately, we were looking to go long at the 114.60 handle. And while price came within sniffing distance (8 pips away!), it never quite got there. Boo hoo! Still, if you were able to find an opportunity to go long regardless, then congratulations on your whopping 380-pip victory.
For today’s play, the pair has reached the 118.50 minor psychological level, although “minor” is actually an understatement because the said price level has significant market interest. Just switch to a daily or weekly chart, and you’ll see. There is therefore a chance that the pair may be pulling back soon, so we can jump in with a long. And in case there is a pullback, all Fibonacci retracement levels look valid. Although there is also a chance that the pair may retrace all the way to the 116.00 major psychological level.
We identified that there rising wedge on AUD/USD’s 1-hour forex chart yesterday. And would ya look at that? It quickly broke to the downside. And if you found a trade almost immediately after I posted the chart, then you would have harvested about 150 pips. But if you shorted at the breakout point, then you would have grabbed about 80 or so. Either way, give yourself a pat on the back for a job well done.
As I mentioned yesterday, the pair could potentially move for 160 from its breakout point, so there may still be room for the pair to move lower. However, the 0.7370 handle has seen significant market interest in the past, so chances are good that bulls will make their stand here. If that happens, then the pair will likely be pulling back. And the pullback area to watch appears to be the 50% retracement level, since it lines up with the 0.7440 handle, another price area with significant market interest. Anyhow, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, alright?
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