More Analysis For The AUD/USD

Posted Friday, January 19, 2018 by
Shain Vernier • 2 min read

It has been a big week for the AUD. Unemployment numbers came in higher than expected and the Westpac Consumer Confidence report greatly underperformed the previous release. Even though the news was not rosy, the Aussie has still traded with strength.

For the second straight session, gold is trading deeply in the red. This development has put the brakes on the Aussie. After early enthusiasm, the AUD/USD is shaking out near .8000, down from an intraday high of .8038. If the selling continues, a 38% Fibonacci buy may come into play.

AUD/USD Technicals

My colleagues Rowan and Skerdian have covered the Aussie in-depth over the past few sessions. Be sure to check out their analysis for a comprehensive picture of this market.

AUD/USD, Daily Chart

The daily chart is a great illustration of the bull run in the AUD/USD. Dating back to early December, it very much mirrors the price action of gold. From a technical standpoint, .8000 has been the primary catalyst driving recent participation.

No doubt about it, right now .8000 is where the battle is being fought. Here are a few levels to watch for the remainder of the U.S. session:

  • Resistance(1): Psyche level, .8050
  • Resistance(2): Psyche level, .9000
  • Support(1): 38% retracement of current rally, .7950
  • Support(2): 20 Day EMA, .7867

Bottom Line: The topside resistance levels are simply big round numbers, typically unreliable without supporting evidence. However, the downside support 38% retracement level is attractive due to its relation to the trend and proximity to a round number.

Taking a long position from .7955 with an initial stop at .7924 is a solid way to enter with the prevailing trend. A 1:1 R/R yields a 31 pip return. My orders will remain in queue until the trade is elected or until .8038 is taken out.

If .8038 is penetrated, it is back to the drawing board for a fresh Fibonacci retracement. For a trade that is more timely, check out Skerdian’s previous live market update outlining an immediate approach to this market.

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