AUDUSD: Support Near .8935 Within Reach to Test The Pairs' Resolve
The daily candle chart below shows price history of the Australian Dollar (AUD) versus the United States Dollar (USD), known as the AUDUSD currency pair, and trading near .8960 in current trading session, after moving lower from the opening price just over .9000 earlier today.
Support has been building around .8935 in recent days, and the low of .8942 today is still within reach of that support level (less than 10 pips away). If this level is breached, then .8800 may be the next target as the medium term trend still appears bearish.
However, after finding support at the end of January near .8658, the pair has since rebounded higher and in somewhat of a sideways range that eventually led to a short term bullish recovery,with resistance encountered just under .9100.
Last time the pair was covered in this series, that bullish moment was thought to be loosing steam, and had since traded again in a sideways range before leading to today's levels - which have edged lower.
The recovery of last October met resistance on the same line that appears to be guiding the medium term trend lower, therefore with those factors still in play, a push to test higher resistance (on point 1 in magenta color on chart) could follow, if support holds, whereas if it fails, as mentioned above, then AUDUSD could head back towards new lows for 2014.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. Bullish Buy Entry Order
Create a "Buy Entry Stop" @ .9026 with a Limit to take profit @ .9074 and a stop-loss @ .8998 Risk/Reward Summary: Limit risk = +48 pips profit / (-28) Stop-loss risk = Gain to Loss ratio = 1.71
2. Bearish Sell Entry Order
Create a "Sell Entry Stop" @ .8926 with a Limit to take profit @ .8801 and a stop-loss @ .8948 Risk/Reward Summary: Limit risk = +25 pips profit / (-22) Stop-loss risk = Gain to Loss Ratio = 1.13
Medium Term Chart with Daily Candles: