Falling outside the range. Trades at the lows
The AUDUSD continues to tumble to new session lows after the break below the 0.7607 floor area. The price has just printed a new session low at 0.75668.
What now?
Well that 0.7607 area is a ceiling now. The price should not trade back above that level.
On the downside, the 0.7550 level was a swing low on the 4-hour chart above, before the pair moved higher and above the 0.7607 level. That is the next target below. A stronger support target comes in at the 0.7510 to 0.7527 area. That area is home to:
- the 100 and 200 day MAs at 0.7518-24
- The 38.2% of the move up from the Dec 28 low at 0.75199, and
- A series of swing lows/highs going back to Jan 12
That area I expect to be tested going forward (at some point) now that the floor above has been broken. That floor remember, was in place for 4 weeks, and during that time the range was a small 138 pips. So there SHOULD be some pent up energy on the break that should keep the sellers in control.
Risk?
Well the 0.7607 is a strong line in the sand. Other than that watch for the 38.2-50% of the last trend move lower at the 0.7590-97 area. On a trend move break like we have seen today, traders tend to come in more aggressively. I will be looking for sellers to show there hand by staying below that area now.
