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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.

AUDUSD trend

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.

support resistance zone

 

 

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.

AUDUSD bull trap

  1. Amazing way price behaved according to levels.
  2. 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.

 

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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