Weekly closing price: 0.8108
Since weekly price struck the weekly channel support extended from the low 0.6827 seven weeks ago, AUD/USD bulls have been on the offensive. Last week’s action dragged the commodity currency to highs of 0.8135, breaking through weekly resistance at 0.8065 (now acting support) and possibly opening the stage for a continuation move up to weekly resistance penciled in at 0.8224 (not seen on the screen).
Zooming in for a closer look on the , we can see that the break of weekly resistance mentioned above at 0.8065 has placed a daily formed back in early Jan 2015 (proved valid in May 2015) at 0.8233-0.8159 (houses the weekly resistance at 0.8224 within) on the hit list.
Friday’s action on the H4 timeframe erased all losses that followed US President Trump’s comments regarding a strong dollar. The H4 candles bottomed just ahead of the 0.80 band (H4 support at 0.8022) before starting the recovery, and ended the day chomping through the 0.81 level.
As can be seen on the H4 timeframe, the pair chalked up a closing H4 selling wick a few pips above 0.81. This likely caught the eye of traders. However, looking to sell this formation is not a trade we would label high probability. Here’s why:
1. Possible buying pressure from 0.81.
2. Directly below 0.81 we have a H4 demand base located at 0.8061-0.8081.
3. Within the H4 demand is the weekly support at 0.8065.
4. The H4 selling wick failed to clip the underside of the current daily supply, thereby indicating further upside may be needed before serious sellers make an appearance.
Although a sell is out of the question, in our opinion, a buy is also somewhat tricky given how close the daily supply at 0.8233-0.8159 (houses the weekly resistance at 0.8224 within) is positioned!
Data points to consider: US core PCE price index m/m at 1.30pm GMT .