AUD/USD: Technical outlook

2016年10月9日

Weekly gain/loss: - 71 pips
Weekly closing price: 0.7584

Weekly view: During the course of last week’s sessions, the commodity currency came under pressure after locking horns with the trendline resistance extended from the high 0.8295. In addition to this, we also saw price close below support registered at 0.7604 (now acting resistance). From a technical standpoint, this likely places the channel support line taken from the low 0.6827 in the spotlight this week.

Daily view: Thursday’s close below weekly support has potentially opened up the path south for prices to challenge the support area coming in at 0.7517-0.7451, which has been active since late Mar 2016. Granted, Friday’s retest to the underside of the weekly barrier is a little concerning given that it represents indecision. Nevertheless, pressure from weekly sellers will likely help push things along here.

H4 view: The aftermath of Friday’s US job’s report saw the Aussie break through the 0.76 handle and clock highs of 0.7624. Be that as it may, the rally was a relatively short-lived one as price hit the brakes and reversed from here, pushing back below 0.76 and regrouping around the support area at 0.7568-0.7549 to end the week. As we highlighted in Friday’s report, this support area is significant in that it was used to propel the currency beyond the weekly resistance 0.7604 back on the 21st September. So we’re not surprised by the bounce seen from here.

Direction for the week: According to the higher-timeframe structures, further downside seems feasible to the aforementioned daily support area. After that, direction is difficult to judge, in our opinion, since this daily area intersects with the above said weekly channel support line.

Direction for today: Until the current H4 support area is taken out, we do not see this market selling off. A close below this barrier would likely open the trapdoor down to the 0.75 handle, which, as you can probably see, is housed within the daily support area discussed above.

Our suggestions: For our team to become sellers in this market, we require a H4 close beyond the current H4 support area, followed up by a retest and a H4 bearish candle. For all that though, this may not come into view today due a light news docket and US banks being closed in observance of Columbus Day.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: Watch for a close below the H4 support area at 0.7568-0.7549 and then look to trade any retest seen thereafter (H4 bearish candle is required before pulling the trigger).