AUDUSD trend up but expect price retracement near support resistance
What is trend of AUDUSD? Up trend
In September, AUDUSD the commodity currency pair from Down Under made a loud and clear bullish reversal pattern in the form of a bullish expansion over the trading high of the previous month. This was a signal to us that a new trend is starting.
AUDUSD trend is now into its second month or eighth week of rallying. There is no sign of slowing but maybe its time for some retracement otherwise bulls who have not entered do not have any opportunity.
Will AUDUSD retrace? There are 2 reasons to expect retracement
There is a multi-year support resistance zone that maybe has been tested 5 times (although candlesticks and line charts offer different ways to count). Besides that level confluences with 38.2% fibonacci retracement level when we look at the high to low flow. I have written about the strength of very significant support resistance levels that have been tested multiple times with a USDJPY case study. Levels like this have a lot of stopping power – price may even overshoot this level but in the case of USDJPY we know exactly how price turned out to be.
UPDATE: 23 October 2013 post-Aussie CPI multiple time frame price action
A multiple time frame analysis of AUDUSD price action at this point is an educational treat.
- Amazing way price behaved according to levels.
- That since price was setting up at significant resistance level that could be spotted from weekly and monthly charts, the CPI data was used to generate a breakout that turns out to be false breakout, stop hunting, wash and rinse, sucker’s rally or bull trap by whatever name to call it. The explanation for all that here and here. Never never play breakouts.
@Sohtionghum Hi TH, traded on this actually after reading Ur blog. Shorted this morning n closed at +90pips in a few hours.
— GG (@GGOH31) October 23, 2013