Aussie Nears Macro Resistance: Possible Late Week Short
The Australian dollar has put together a strong week against the greenback, posting just over a 50 pip gain. The small daily ranges have produced a nice grind higher for Aussie backers. As of this writing, the AUD/USD is pushing intraday highs at .7700.
It appears that currency traders are bullish the AUD following this week’s Reserve Bank of Australia’s (RBA) minutes were released. After a challenging late-Summer and Fall season, the Aussie is showing signs of life.
AUD/USD Technicals
With so many small intraday ranges recently, the weekly chart may produce a defined area of resistance to trade from.
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Here are the key resistance levels for the remainder of the U.S. session:
- Resistance(1): 20 Week EMA, .7701
- Resistance(2): Bollinger MP, .7708
- Resistance(3): 38% retracement of current wave, .7739
Bottom Line: The AUD/USD is in the process of testing the EMA and Bollinger MP. As of now, it does not look as though there is enough action to show us a decent retreat from these levels.
However, price is very near a macro-38% Fibonacci retracement level. The area from .7708 to .7739 is likely to be an area of robust resistance. For the remainder of the week, I will be selling in front of the 38% retracement at .7729. Implementing a 1:1 R/R management plan with an initial stop loss at .7756, this trade produces over 25 pips.
The best chance for this trade to go live will come with tomorrow’s U.S. economic reports at 8:30 AM EST. If it is elected on these releases, be sure to have your stops down and leverage accounted for. In addition, this position will need to be exited before Friday’s weekend close.
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