AUDUSD: 0.7000 Tested. Now What ?

AUD/USD – Charts & Analysis

As of writing: Strength Vs Weakness Tables Standings

• AUD is showing W2 (Weak) and W1 on the Trend and Day trading tables respectively
• USD is showing S1 (Strong) and S2 on the Trend and Day trading tables respectively

Link to LIVE/Rolling Strong/Weak Tables HERE

Observations:

• The chart above shows price again testing the 0.7000 Support level
• This level was established in Sept ’20, retested in Nov ’20, Dec ’21 and Jan ’22
• Below 0.7000 we see very little by way of support until 0.6400
• 0.6400 was established as a 1 month area of resistance turned support during April to May 2015
• Whether this level proves significant remains to be seen
• ADX: We see ADX with sellers in control and weak trend strength
• Stochastics: Seen remaining very much in oversold territory

Observations:

• On the chart above we again acknowledge the 0.700 support level
• We also note the confirmed bearish trend line/channel anchored on contact with a monthly timeframe bear trendline above 0.7550 resistance 
• Yesterday’s daily bar 125 point move to the downside again testing and this time closing below 0.70
• We also note today’s doji bar, more on this below.
• ADX: Again we see a strong ADX reading clearly showing buyers in control, however trend strength remains weak below 25
• Stochastics: Sto however remains very strong to the sell side

Observations:

• The 8 Hour chart shows the bear channel in finer detail, how yesterdays US session breached and closed below 0.70 on contact with channel suppport
• Todays AP session opened with an uptick, handing over to an indecisive EU session (Re Previously mentioned daily Doji).
• Given the significance of the 0.70 handle coupled with the market hesitancy I applied a Fibonachi retracement tool
• Here we see a 38% retracement level circa 0.7040
• ADX: Again we see a strong ADX reading clearly showing sellers in control, along with trend strength just above the  25
• Stochastics: Sto also remains strong to the sell side

Current Narrative:

• The current narrative appears to be to the downside, with sellers in control, testing the 0.70 handle
• The market appears to acknowledge the significance of the 0.70 handle along with bear channel support
• Should this downside narrative continue we may well see a continuation of the move
• Alternatively, based on hesitancy, price stalls around it’s current daily low of 0.6910, reversing back to the 38 Fib level of 0.7040, or thereabouts

My Call:

• This is a tricky one. Entering a trade short on a test of support AND channel support gives very little room for safe stop placement.
• I’m happier to sit this one out for the moment, awaiting a possible Fib 38 retracement
• Should the 38 be visited I will look to enter short below the 0.70 handle

Strength/Weakness Caveat:

• A removal of either of these currencies from my S/W Trading Tables (HERE) would of course negate this entire trade plan