AUDUSD – Opens the week at an interesting resistance level

The Aussie’s decline from 1.0857 has so far taken the form of a strong, impulsive move i.e strong downward moves interupted by relatively weak, corrective uptrends

The market has opened this morning with the hourly chart sitting just under the sort of  resistance levels that can often be of practical use to traders.

A rejection of this level could set up for an opportunity to enter close to the end of what could be another corrective uptrend. In risk: reward terms this allows a relatively close stop if the set up fails but the possibility of a a significantly larger profit if the impulsive downtrend continues.

If things go the other way and there is a clear break or overlap above this resistance, a more significant rally could be in prospect.

AUDUSD - 1 Hour. Source: CMC Tracker

Iv’e outlined the resistance area on the chart above. It consists of:

  • Previous horizontal support and resistance (dashed line)
  • 200 period moving average (green line)
  • A Fibonacci cluster zone. This consists of a 50% retracement from the last major peak at 1.0637 and a projection that the B/C swing will be the same size as the swing up to A (A=C)

One strategic approach to this situation would be to sell on a confirmed rejection of this resistance zone.  For example an entry set up could occur on the first close below “A” providing it happens after a trend peak at the resistance zone.

The alternative would be a move up through the moving average. If price was to clear the average by say 25 pips this may imply a significant move higher.

Cheers

Ric

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
This entry was posted in Forex, Market, Trading and tagged , , , , . Bookmark the permalink.

4 Responses to AUDUSD – Opens the week at an interesting resistance level

  1. dv34 says:

    Nice. I missed the daily cluster around 1.0350ish last week… a short term sell off would be even better to get long again for a rally possibly from 1.0320ish – a nice target would be 1.0570. Macd histogram is starting to diverge, although other indicators are not as clear

    • dv34 says:

      NZDJPY at interesting junction, divergence daily at resistance (5wave upswing) weekly bearish engulfing candle… looks like a sell off is likely. the jpy is likely to strengthen across the board this week…

      • Ric Spooner says:

        Hi dv,

        Thanks for sharing. Much appreciated

        Ric

      • dv34 says:

        Jpy strengthening across the board as I suspected, cadjpy short from a couple of weeks ago finally turning green.. caught a couple of short term shorts as well on gbpjpy and chfjpy. I think i will miss the Dow at 13372, and S&P at 1427… as they haven’t quite made it… sold most stocks I own (long) as I think it will get choppy in the next quarter or so… holding only small very long term positions

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