Above the December 2017 swing lows at 0.7501 and the 50% retracement at 0.7480.
The AUDUSD bottomed on Tuesday at the 0.7472 level. That took the price below the 50% retracement of the move up from the 2016 low at 0.74808 (see the weekly chart below).
On Wednesday, the price action was up and down, but closed above the 0.74808 level (50% retracement), but below the December 2017 lows at 0.7501.
On Thursday, the price moved above the 0.7501 level, tested it on a dip in the NY session, but bounced off the level (see hourly chart below).
Are we seeing some profit taking before the Reserve Bank of Australia's Statement on Monetary Policy to be reported in the new trading day?
Most likely.
A risk event coupled with a test of some longer term technical levels can give traders "cause for pause" (or profit taking urges). That can turn sellers into modest buyers, and explains the price action today.
Nevertheless, the rally on Thursday has indeed been modest.
Looking at the hourly chart below, the pair moved up to high at 0.7542. That was above the 100 hour MA (blue line in the chart below) but right at a topside trend line.. More recently, the trend line was tested again and held. The 200 hour MA (green line in the chart below) is catching up to the price at the 0.75512 (and moving lower).
Are we seeing some stall on the topside ahead of the SoMP?
Most likely too.
By using the technical levels (both above and below) as bias defining levels (bullish or bearish), it saves the next break and run for the news event.
IF the report is more hawkish (bullish), the topside trend line on the hourly chart and the 200 hour MA at 0.7551 (green line on hourly chart below) will be targets to get to and through.
Above that, and we could see a move toward the 38.2% of the move down from the April high at 0.7602 (see chart below)
If the report is more bearish, a move back below the 0.7501 and 0.74808 level will open the door up for more downside momentum. The bearish trend will not be over.
Something more neutral, and we are likely in for some up and down chop as the market drives toward the weekend (pay attention to the levels).
