The AUDUSD sellers had their shot this week with a move outside of the “Red Box” that has confined the pair between 0.6356 and 0.65214 for 7 trading weeks now. The failure to break – and move lower this week – has given the buyers a go-ahead to push higher midweek. Yesterday the price returned toward the 100 and 200 bar moving averages on the 4 hour chart (blue and green lines on the chart below) and stalled. Today, buyers pushed higher extended toward the extremes of the “Red Box”.
The upside today did stall ahead of the extreme between 0.6510 and 0.65214, and is rotating modestly to the downside. However, going forward if the price can remain above the 100 and 200 bar moving averages between 0.6422 and 0.64278, the tilt of the up-and-down trading range remains in favor of the buyers (see blue and green lines on the chart below). Those buyers just need to get outside of the Red Box above at 0.65214 to increase that bullish bias.
If that ceiling area is broken today – or going forward into the new trading week – the 38.2% retracement of the move down from the July high comes in at 0.65463. That too would need to be broken to show that the buyers are serious about moving to the upside.
So overall, this week’s trading saw an initial move to the downside and break lower below key for support. However, that break failed. The sellers had their shot and they missed, paving the way for a rebound higher (in the 2nd half of the week). There is more to do with a break outside 0.65214 and extension to and through the 38.2% retracement of 0.6546, but for now, those buyers are holding the better hand technically.
This article was written by Greg Michalowski at www.forexlive.com. Source