The AUDUSD extended to the upside earlier this week after the CPI data and broke above the
- 100-day moving average,
- 38.2% retracement of the move down from the July high, and a
- Swing area between 0.6500 and 0.65229.
However the momentum could not be sustained and yesterday saw the price move back to the downside, below the 38.2% retracement, below the swing area, and also back below the 100-day moving average at 0.6489.
The momentum to the downside yesterday stalled just ahead of another swing area between 0.6445 and 0.6455. The subsequent move to the upside today saw the price move up to retest the broken 38.2% retracement (in the middle of the aforementioned swing area) but could not go any further.
What next?
The price is back below the 100-day moving average at 0.6489. With the inability to get above the 38.2% retracement, and the price below the 100-day moving average, the sellers are more in control.
That does not mean that there can not be a reversal, but until the 100-day moving average and 38.2% retracement are broken (especially after the inability to do so today), the buyers and sellers are lodged in more of a battle with the sellers winning.
For sellers willing to make that bearish bet, the 0.6445 – 0.6455 level becomes the next downside target.
This article was written by Greg Michalowski at www.forexlive.com. Source