Potential long reversal for AUDUSD after reaching 4H swing low
On the 4H charts, the AUDUSD is at a crossroads. Since around March 20, the pair has been in a downtrend. Especially the last "wave" was very clean and controlled. The pair reached the 161.80% Fibonacci extension and at the same time, we're at a previous swing low which acts as a strong support.
Today, this setup gets more interesting. The lower bounds of the support level were tested, over-reached a little, but then shot back up, forming a good size pin bar. The price is still staying below the moving average, but as you might know, I am now waiting until I see a strong drive up (creating the pin and drive reversal entry trigger I often trade).
The pin bar, together with the previous test of the support level, creates somewhat of a double bottom. If this holds, I could see the price reverse and move up, with some of the potential resistance levels mapped out in light blue. If the support level breaks, there is a lot of downside for this pair as well. I'm keeping my options open, with a careful long bias.
As I said, I'm waiting for a drive candle; a momentum candle to the upside. I have alerts set at 0.75200 and will re-evaluate the price action once the price reaches it.
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Today, this setup gets more interesting. The lower bounds of the support level were tested, over-reached a little, but then shot back up, forming a good size pin bar. The price is still staying below the moving average, but as you might know, I am now waiting until I see a strong drive up (creating the pin and drive reversal entry trigger I often trade).
The pin bar, together with the previous test of the support level, creates somewhat of a double bottom. If this holds, I could see the price reverse and move up, with some of the potential resistance levels mapped out in light blue. If the support level breaks, there is a lot of downside for this pair as well. I'm keeping my options open, with a careful long bias.
As I said, I'm waiting for a drive candle; a momentum candle to the upside. I have alerts set at 0.75200 and will re-evaluate the price action once the price reaches it.
Find more analysis on smartforexlearning.com and give us a follow:
- on Twitter: twitter.com/smartfxlearning
- on Facebook: www.facebook.com/smartforexlearning
- on Google+: plus.google.com/%252BSmartforexlearning