AUDUSD new wave down is coming?
AUDUSD is a trading school example of the trend trading (long-term downtrend) but also with painful multi-month consolidations which are testing the nerves of traders, building their patience, and influencing the styles for trading from range trading to trend trading. On a monthly chart, we can see a different structures of falling breakouts from triangles, flags, falling wedges, and reactions to key Fibonacci levels in pullbacks after the breakout 50-61.8%. All of this in giant extreme swing down Aug 2011- March 2020, during the so-called “economic” recovery. AUDUSD is considered high yielding par attractive when the risk is ON and the stocks are going higher. What is that telling you?
We can see on the weekly chart that the pair has touched Aug 1998 low and bounced higher in a pullback testing now the 0.7200-0.7250 zone for a breakout higher, which is not coming, or rejection for a long-term downtrend continuation and is testing the 61.8% Fibonacci retracement of the latest swing down to 0.54903.
And where are we now? On a daily chart, as Stock Indices are touching the high levels again, AUDUSD is squeezed in a rising wedge formation, the ADX is losing momentum, which means that the uptrend pullback is coming to an end. For a downtrend continuation and extension lower we need to see a confirmed break below rising wedge support 0.7100, and for high probability short trade entries as well. As we saw from the higher time-frames the month of August is extremely important and usually, turns-reversals are happening during this month. We are close seeing that this could be the case for August 2020.
We have used the combination of the top-down trading analysis to get these key levels explained in the charts.
