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I’m going to get started today on the Australian Dollar versus the US Dollar [AUDUSD]. Starting on the Daily Chart, we could see that the previous trend was up. We started all the way back here in the beginning of the year, in January, down into the 0.8650s. Then the market began climbing, as it pushed through the next several months, into April, capping out at the highs all the way up here into the 0.9450s.
Since then, we’ve been bouncing around inside of a range. I’ve drawn out this range with this red box. The left-hand side of the red box sits right here into March 26. And since we got above that yellow-shaded area here, at the bottom of the box, we found resistance at the green zone, support once again into the yellow-shaded area, down into the mid to low-0.9200s. We rallied back to the green zone again, top of the range. Then we went right back down to the yellow zone over the past couple of weeks, into the bottom of the range and the yellow-shaded area and the support. Now, once again, we’re back to the top of the range and the green-shaded area.
So, we’ve developed this range. Basically, since March, we’ve been bouncing around between the green and the yellow-shaded area. And like I said, recently we’ve bounced off of the yellow-shaded area and now rallied back to the green zone. So, as long as it stays underneath that green zone, underneath the top of the range, I believe there’s a better opportunity here for signs of resistance, reversal, and a turn back down for the AUDUSD. As long as it stays within the lower part of the top of the range, we would look for reversal to go back down. Only if it breaks above this green-shaded area, if gets above the green zone, would we expect it to continue to pressure higher, so this is what we’re looking at right now.
We’re at the top of the range, challenging the resistance and the green zone. The only real reason to trade this currency pair today was not buying into the resistance because there’s a high probability of a resistance there. High probability that we could see some reversal because that’s what’s happened basically since March. Every time it challenges the top of the range and the green-shaded area, we have seen resistance. So, there’s no real reason today to buy this. Remember: buy low, sell high. When you’re at the highest point of the range, it’s more likely that you’re looking to sell it.
Not only the green-shaded area, top of the red box, but we also look back over the past several months and we would see the highs have generally gotten lower. I’ve put a black trend line here, just connecting our last two highs. And doing that, we’re now challenging that same black trend line here into the upper-0.9300s. So, the black trend line representing the last falling highs, the green-shaded area representing resistance, the range represented by the red box – all of that telling me today that I want to have a sell bias here for the AUDUSD and no real reason to look for a buy.
One more clue to that would be the Forex Black Book trend bar, down at the bottom of the chart, is red. Again, that gives us a sell bias. It is dark red because we’ve been going up for the past few days and we’ve seen it rallying back to the top of the range, but it’s remained red this week, giving us an overall sell bias for this currency pair.
Let’s take all of that information down here to the 4-Hour Chart. Now, it doesn’t change the outlook. The outlook is still the same. As long as it stays within or under that green-shaded area and the top of the red box, I would be looking for sells, but it gives us another clue here. Especially with the Forex Black Book trend bar being red, we’re now going to begin looking for sells into resistance and new sell signals.
Well, if you look back here on the left-hand side of the chart, and this is exactly what I’m meaning by that. I’m just going to draw a big circle here, back on the left, and you could see all those red arrows here at the top of the chart. So, what happened? The market went up into the green zone, found resistance for several days. We saw one, two, three, four, five, and really six and seven if you count those two yellow arrows there. Seven sell signals for the Forex Black Book and eventually the market, the bear market took control and drove it all the way back down to the bottom of the range and the yellow-shaded area.
So, just because we’re back up here into the green zone gives me reason to believe I’m looking for the same similar action there. I’m looking for building of selling resistance. I’m looking for several red arrows. We have the red trend bar. I’m looking for selling opportunities. And as long as it stays underneath there, there is no reason right now to buy it. Selling into resistance, new red arrows, new clues to reversal. You could be looking for candlestick formations that imply reversal. You know, you’re going back to shooting star candlesticks, engulfing candles. You’re going back to those basic candlestick structures that imply reversal from a resistance level. All of those are possibilities from here.
Let’s take one last clue here. Let’s take Fibonacci from the last high, back over here, top of the green-shaded area. The last high where the black trend line connects and go to our current lowest low here, down at the bottom of that downtrend. So, downtrend measured with Fibonacci puts the .786 Fibonacci retracement level at 0.9364. The .886 Fibonacci retracement level is at 0.9384, 0.9364. 0.9384 and 0.9364, .786 fib, and .886 fib right there at the bottom of the green zone. That’s where we’re currently finding resistance. So, again, I’m going to actually bring this arrow down here a little bit. As long as it stays underneath this green zone, we have the .886 fib at 0.9384, .786 at 0.9365. We see historical resistance back here.
There is no reason to buy this right now. There’s too much evidence of resistance and as price ceiling, so only looking for clues to resistance, reversal, and selling opportunities on rallies into the top of the range here for the AUDUSD today.
