I wrote on Monday last week that we had a pivotal resistance level at 0.7223 still in play. I thought that a bearish breakdown below approximately 0.7190 would complete a bearish head and shoulders candlestick pattern and suggest the price would continue to fall.
This was a good call as the resistance at 0.7223 held firmly when it was reached, giving a profitable short trade opportunity.
The technical picture has changed over the past few days, with risky assets (mostly stocks) making strong selloffs before rebounding late yesterday. This risk-off then recovery movement was naturally replicated in the Australian dollar, which is a key risk barometer currency. We saw the price plunge then bounce strongly at the support level at 0.7102 confluent with the round number. There are clear, obvious resistance levels above, with the nearest being 0.7170, which held the price just a few hours ago. The price is now trading in the middle of this range and waiting for direction. Risky assets are looking weak and prone to further falls, due to worries over the Fed’s tightening of monetary policy and the prospect of a military conflict between Russia and Ukraine. These fears are likely to determine whether the price eventually breaks below 0.7100 and continues to fall, or whether we start to see a gradual recovery and rise.
I would be happy to take a short trade from another bearish rejection of 0.7170, or a long scalp trade from another bullish bounce at 0.7100, but such a scalp should be carefully monitored on a low time frame.
This was a good call as the resistance at 0.7223 held firmly when it was reached, giving a profitable short trade opportunity.
The technical picture has changed over the past few days, with risky assets (mostly stocks) making strong selloffs before rebounding late yesterday. This risk-off then recovery movement was naturally replicated in the Australian dollar, which is a key risk barometer currency. We saw the price plunge then bounce strongly at the support level at 0.7102 confluent with the round number. There are clear, obvious resistance levels above, with the nearest being 0.7170, which held the price just a few hours ago. The price is now trading in the middle of this range and waiting for direction. Risky assets are looking weak and prone to further falls, due to worries over the Fed’s tightening of monetary policy and the prospect of a military conflict between Russia and Ukraine. These fears are likely to determine whether the price eventually breaks below 0.7100 and continues to fall, or whether we start to see a gradual recovery and rise.
I would be happy to take a short trade from another bearish rejection of 0.7170, or a long scalp trade from another bullish bounce at 0.7100, but such a scalp should be carefully monitored on a low time frame.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.