Commodities hurt the AUD
Commodities have been pushing lower and in the process have taken the AUDUSD down with it (see Adam's earlier post here).
For the AUDUSD, the pair tumbled lower yesterday - falling below the 50% at 0.7454 and the low from last week at 0.7439 in the process.
Today, that momentum lower has continued to the 61.8% retracement of the move up from the December low. That level comes in at 0.73846. The low just reached 0.73824. Was there some buying? Sure. Although commodity prices are lower, there do come times where buyers can lean. They may be profit takers. They may be dip buyers but risk can be defined and limited against the level. Will the level continue to hold?
The bias is lower. The trend is lower.
Looking at the 5 minute chart, the trend move from yesterday has been slowing. The lower trend line has been stalling falls (see red circles). However, the rallies have still been contained. There has been two looks above the 100 bar MA (blue line) but the 200 bar MA (and topside trend line) stalled the last rally higher. The buyers turned back to sellers (at green circle 3 in the chart below).
What now?
Well the 61.8% held and that also corresponded with the trend line on the 5 minute chart. So there is a couple reasons to stall the fall at that level. Will it hold? Maybe, but buyers know the risk.
If you buy, what do you want to see happen to the upside?
- Get above the 100 bar MA on the 5-minute chart (blue line at 0.7401 and going lower), and
- Get above the 200 bar MA at 0.74098 (it is moving lower).
The trend line is also a level to get above too.
So, not surprised to see buyers at the support, but if the low is in place, there needs to be some upside targets taken out. Then perhaps there can be more corrective momentum from the 175 pips tumble lower over the last three trading days.
Upside target? The 50% at 0.7439 and 0.7454 (old low and 50% retracment).