The AUDUSD has continued up-and-down corrective/consolidative trading today. Yesterday, the pair peaked against the 200 hour moving average (green line in the chart below). Today, both the 50% retracement of the move down from the January 28 high to the February 3 low (at 0.78246), and the 200 hour moving average (currently at 0.78308), attracted selling interest. Sellers showed up earlier today.
AUDUSD trades between the goal posts
On the downside the 100 hour moving average (blue line in the chart above) acted as a support level in Asian trading. With support defined by the 100 hour MA and resistance against the 200 hour MA, I call this dynamic “trading between the goal posts” (as defined by each MA). It suggests that “the market” is still unsure of the directional bias.
We know from a fundamental perspective that the Reserve Bank of Australia eased just 2 days ago. The sharp moved to the downside has been completely reversed since then however. Should the bearishness remain for the currency pair on rallies? I would think so. The sellers against the resistance above showed me that others feel the same.
Having said that, a move below the 100 hour moving average and staying below that level will still be needed to keep the momentum more to the downside.
Look for sellers to continue to use the 200 hour MA above. Should there be a move above, there is the 0.78485 to 0.78571 level to still get above. However it will muddy the water for the sellers and suggest perhaps the focus is shifting more toward the US dollar (or the idea that commodities are due for a correction).
Watch the levels. Listen to the levels. They tell you what the market is thinking.