At 5:30am today, the Reserve Bank of Australia reaffirmed it’s cash rate at 1.50%, causing a brief and minor spike in the AUDUSD, before price closed on the hour below the critical 0.7600 level.
Here is the 4-hour chart showing the current price picture:
The candle marked “1” shows the spike into 0.76, driven largely by the rate news, and although the wick looks long (suggesting a solid “test”), it’s really only 20 pips in range. Very interestingly, the candle that has just followed, marked “2”, has gone even higher, suggesting that the market wasn’t quite ready to fall.
Why isn’t price falling after testing 0.76?
The 1-hour picture might offer answers:
Price is stuck in a channel. These are bearish formations, and we would expect price to breakdown lower eventually. However, price is now closing above 0.76 on the hourly charts, meaning that we have horizontal support to defeat and then the lower channel trendine will come into focus.
To short the Aussie, we need bearish price-action rejecting the 0.76 level. This can come in two forms:
1. A big bearish candle on the 4-hour timeframe
2. A breakout of the channel on the 1-hour timeframe
Are you going to trade the AUDUSD short with me?