Between an early bull and a late one going AUDUSD long, the proposition is very different. AUDUSD is strong but approaching resistance levels. There are 3 charts here you need to look.
AUDUSD is strong compared to other dollar pairs like EURUSD, GBPUSD, NZDUSD. As a short term indication, it is trading above June and July highs at the moment. In fact going long AUDUSD is also sweet for long term investors because of the positive swap. In addition, RBA’s interest rate decision was last Tuesday and the next one is 06 September meaning that at least rate-driven volatility is now behind. RBNZ’s rate decision is tomorrow morning so buyers will have to tighten seat belt for potential hair-raising moves.
Early movers for AUDUSD longs can seat back enjoy the rally but for those who have missed the bus, going in right now is a different proposition altogether. Take note of features in these 3 charts.
Slide #1 – AUDUSD has not closed a week above 0.77177 since 59 weeks.
Slide #2 – AUDUSD has not closed a month above 0.76556 since 13 months.
August is still young there are 21 more days to go. This is not a concern for scalpers or day traders but is important to anyone who intends to carry over a position. If AUDUSD closes at month end below 0.76556, any movement above this level is merely a false break.
Slide #3 – Retracing into overhead resistance?
Finally there are at least two features to note in this chart. 1. There is a trend line overhead (red) and price is getting awfully close. Resistance or not we will have to observe. 2) Without a big reversal pattern such as a W or VVV, AUDUSD strengthening looks suspiciously like a retracement action only in the channel’s context. In fact even the length of the red arrow and angle is exact.
If this is a retracement and not a bullish reversal, does the arrow indicate that amount of retracement as well as duration is almost complete?
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
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