December 7, 2022

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AUDUSD squeezes higher into the weekend. Double bottom stalls the fall this week.

2 min read

Ups and downs

The AUDUSD had a final squeeze higher today in what was an up, down and back up again trading week. 

Ups and downs

The pair closed last Friday at 0.7353, chopped up and down on Monday, closing lower on the day. 

On Tuesday, the initial move was lower but support buyers came against the July 28 low creating a double bottom at that level (at 0.73155 area).  

Wednesday after an initial dip saw the price move sharply to the upside, cracking above its 100 and 200 hour moving averages in the process (blue and green lines).

On Thursday the pair reversed the Wednesday move higher, stalling the fall near trend line support.  

Finally today, after stalling initially against its 100 hour MA, the pair found support against the aforementioned trendline and after moving back above the 100 hour moving average, traders leaned against the MA level on the dips.  Buyers took control helped by the much weaker than expected Michigan sentiment survey. The 200 hour moving average was rebroken, as was the 50% midpoint of the August trading range at 0.75653 and 0.73708 respectively.  The pair peaked at 0.73809 which is off the Wednesday high at 0.73885.

When you have such up and down activity intraday/intraweek, “the market” is unsure.  Adding to that uncertain storyline is that the pair as remained within a 110 pip trading range for 17 days now. Three plus weeks.  1100 pips. That is not a lot (although there has been a number of up and down moves). 

What now as the week ends and traders look to the new week?

In back of your mind is a break and run at some point. To prepare for that, traders need to look for bullish/bearish clues.  I know the price has seen the price move above and below the 100/200 hour MAs this week (whipping traders in the process), it is still important to “listen” to those technical clues.  

Right now, the pairs above both the 100 (based against it) and 200 hour moving averages (blue and green lines).  Stay above the 200 hour moving average and the buyers are more in control. Move below, and traders may look to sell against it (agaIn), looking for a retest of the 100 hour MA and seeing what happens there.

If the 200 hour MA can hold, the focus for the buyers starts to look toward the high for the 61.8% retracement at 0.73838, the the high for the week at 0.7381 and then the 0.7400 area. Above that, and the swing high from July 29 and August 6 between 0.7413 and 0.74152 would be eyed ahead of the high from August 4 at 0.74260.

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