A lot of market participants took profit on their AUDUSD long trades at the close of London yesterday. Perhaps the market was expecting lackluster data out of China and Australia. Last night China posted less than forecast CPI and Australia posted a really bad result for new home loans. Governor Stephens did mention the housing market in the interest rate decision which means the RBA is watching this data closely. Taking a look at the AUD pairs we can see the market responded to this release accordingly.
Looking at AUDUSD this morning I see a weak AUD and a weak USD though USD could get strong later today during the US session especially seeing as we do have an FOMC member speaking later this afternoon. Keep in mind Kaplan is a dove so look out for hawkish comments. Should dollar remain weak for the London session you may consider looking for opportunities on GBPAUD or EURAUD – if Cable and Fiber remain strong for the session.
As far as AUDUSD is concerned, I have trapped price in a range on H1 and indicated the levels of support below and resistance above. I am paying careful attention to the level marked with the x. Huge pivot cluster, previous resistance and since price broke that level to the downside we have failed to make a higher high. Should price move up and arrive at this level, fall and make a lower low below DM2, I would be inclined to consider selling the lower high at DM2. If price broke above that resistance level marked with an x then I would look at buying the lower low.
Keep in mind that today is Friday and we are currently at WM4 and have so far failed to break above. Could profit taking see some bearish moves for the short term? If we break out of the current H1 range to the downside I would be inclined to sell the pull back at role reversal. I am going to keep my stop loss really close and ensure I manage my volume very carefully due to the support zones below. If you are a bull on this pair then there are plenty of green zones to buy at below current price.