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Last week, AUD/USD broke above a range to nearly retest the 2020 highs, but has since pulled back with today’s pullback in risk sentiment.

Is there an opportunity to play the uptrend once again, or is this the beginning of a reversal back to the downside?

Broken Resistance Retest on AUD/USD

AUD/USD 4-Hour Forex Chart
AUD/USD 4-Hour Forex Chart

This week, we’ve got plenty of catalysts to get AUD/USD moving on the forex calendar, most notably the latest monetary policy statement from the Reserve Bank of Australia, and the latest monthly employment situation report from the U.S. later in the week.

With expectations of the RBA to hold off on any additional stimulus measures, and expectations for the employment situation to improve in the U.S., odds are that AUD/USD may continue its uptrend.

This may especially be the case if the news flow on covid vaccines / therapies continues to remain positive, as it had been throughout the month of November. This has been a big theme for the broad global risk rally, and that may continue to overshadow other themes (e.g., rising covid cases, new lockdowns, worsening economic sentiment, etc.) through the end of the year, barring any fresh, unseen global level surprises around the corner.

With that expectation in mind, I am looking to start a fresh long position in AUD/USD. I’ll start with a nibbler order at the bottom of the previous range between 0.7220 – 0.7330 if the RBA does indeed lower expectations of fresh stimulus as expected and the market  continues its pullback.  Look out for a fresh idea if that scenario does play out, and for additional orders to go long after the U.S. government jobs numbers on Friday.

If those U.S. jobs numbers disappoint, it’s possible they could raise fears of another recession ahead, which could favor the Dollar if markets go into risk aversion mode in December. If that’s the case and the price action confirms that with a further pullback, then a deeper pullback may be ahead, so I’ll cancel any orders / trades that I may have taken before the event.

What do you guys think? Are the bulls waiting to play AUD/USD again, or will the pair move back to the bottom of the previous range? 

Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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