AUD/USD has been slowly crawling upwards
Lately the pair has been slowly crawling upwards in what seems to be just a retracement to the bearish impulse started at 0.7385.
The market is waiting for tomorrow’s Australian Employment report results – anticipated change -10.0K; previous 58.6K – so today we are likely to see limited movement but with a bearish bias nonetheless.
The first barrier to the upside (resistance) is represented by the level at 0.7240, which combined with the 50 period Exponential Moving Average (blue line) will create a confluence zone. When 2 or more technical indicators meet in close vicinity of price, they produce a confluence zone which in our case is represented by the 50 EMA and the horizontal resistance at 0.7240.
These so-called confluences are tougher to break than regular S/R and have increased chances of rejecting price so for today we expect a bounce lower once price bounces at 0.7240. In other words, we expect price to climb into resistance before descending lower, but it’s also possible to see a move lower without any type of bounce at resistance. If that is the case, the pair will head into 0.7185, followed by the key level at 0.7170.
How to trade
We favour end of day Puts once the bullish (up) trend line is broken. For extra confirmation, wait for a full one hour candle close below the trend line.
As an alternate scenario, Calls can be entered if price closes a full candle above 0.7240 and above the 50 period Exponential Moving Average.