Trades at session lows/tests Fibonacci support.
The AUDUSD is trading at new session lows as I type. The pair has been moving lower since the cut in rates yesterday.
There was one major-ish correction along the way (see hourly chart). That correction squeezed some shorts yesterday. That move higher stalled near the 100 hour MA (blue line in the chart above). There were willing sellers waiting there to hop on the trend and the price reversed and fell further.
Today, the price action (see lower red box) has been up and down, but we are trading at the lows with lower lows. So the bears remain in control, but there is a stall at the 0.7449 level currently.
Zooming out and looking at the broader daily chart, the pairs stall at the 0.7449 level can be blamed on the 38.2% retracement of the move up from the 2016 lows (see chart below). That level comes in at the 0.74491. We just traded a new low at 0.74465 but so far, there is no momentum. Sellers are still in charge, but they may take a break (and wander higher) if they don't get going (to the downside that is). If there is a correction, keep an eye at the 0.7477-91 as resistance. There have been recent swing lows at the area. Look for sellers to lean against the area.
On the downside, the dip buyers against the 38.2% will likely stop themselves out if the price spends more time below the level. I would think that buyers area just looking for a trade. I don't think they really love being long at 0.7449 (although you never know). A move above the 0.7490 and then 0.7500 would muddy the waters for me.
Is there room for more downside? I think so. Rates still are relatively high and the aftermath of the horrendous CPI and now ease should keep sellers looking to sell rallies. Where might the downside be challenged?
There are two key targets:
- The first is the 0.7385 area. The high from October 2015 came in at 0.7382 and the swing high from Dec 4th stallled at 0.7385. When the price broken above in March, the low correction came down to 0.7292. Traders were leaning against that old ceiling.
- The other KEY support target is 0.7330. The 100 hour MA AND the 50% retracement of the move up from the 2016 low, comes in at that level. When the 50% and the 100 day MA converge, it is worth having a cause for pause.
For the time being though, the support at the 38.2% seems to be holding. Patient traders will be watching the levels above....
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