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I’m going to get started today on the Australian Dollar versus the US Dollar [AUDUSD]. Starting out here all the way out on the Weekly Chart, I want to take a look further back in history along this green-shaded area right here in the middle of the chart.
Follow it backwards in time. We could see some congestion, resistance right here into the September, October, November timeframe of 2013. You could see a couple of weeks. Again, this is the Weekly Chart. A couple of weeks finding support here into June of 2013. You go back along it. You back here to the left-hand side, back in October of 2011. Found some support into this green-shaded area, and then you go back to the far left-hand side of the chart. 2009/2010 finding resistance into this green-shaded area.
Now, you might be wondering why we’re looking at the Weekly Chart all the way back to 2009 and 2010, but as we go down here to the Daily Chart, we could see that same green-shaded area coming into play. Again, here is 2013, where, in September, we found some resistance and congestion, and again here in November finding resistance, and again here in early November we found support. So, there’s why we look at this green-shaded area in history, even all the way out on the Weekly Chart, because we find that it’s a significant historical resistance and support level here for the AUDUSD. And of course that’s where the current market is.
Over the past several weeks, here in the videos and in the Trade Room every day, we’ve been talking about the uptrend. We talked about the previous downtrend, the inverted head and shoulders that we found down here along the red trend line, the creation of a new trend with the blue trend line, and we’ve been buying it ever since it started having that indication of reversal from the Trade Room. As it continued to pressure higher, a couple of weeks ago we saw it go into a period of congestion here in the yellow zone. Broke above the yellow zone and continued the uptrend here into the green-shaded area at the top of the chart as our resistance.
Now that we reached here, we have a high possibility of resistance, given the state of history into this green zone. The green-shaded area goes between 0.9388 and 0.9440. That’s the green zone up here. We know and we’ve been talking about the potential for it to find resistance into this green zone over the past couple of days, and we’ve been watching for clues to that. As it’s been sitting within or underneath that green zone, I’ve told you that you don’t really want to buy this. It’s not a good buying opportunity. Remember: buy low, sell high. So, more likely, as it sits underneath resistance, you’re looking for clues to reversal and clues for resistance. and I think today we see that here for the AUDUSD.
If it does indeed reversal, our support that we would be looking for would likely be all the way back here to the yellow zone. Why? Because if you go back to the left, again, that has been where historically the market has found support after finding resistance into the green-shaded area. So, let’s go ahead and put a couple of arrows here on the Daily Chart. Within or under the green zone, we go back down and challenge back down here to the yellow-shaded area, and of course where the blue trend line sits.
I have three different Fibonacci retracement measurements drawn here. I go from the lowest low of the blue trend line to the current resistance high. I went from this low here, where the red trend line is, to the current resistance high. And I also went from our last little low here underneath the yellow-shaded area to the current resistance high. And we also find that there’s multiple Fibonacci retracement levels overlapping right here in the yellow zone, giving us a clear clue of support and a reversal point for the market right now. A target for reversal as it challenges back down towards the mid-0.9200s, into the yellow-shaded area.
So, clearly these are the two areas to watch today. Anything breaking above the green zone, of course we’ll likely continue the longer-term uptrend, pushing back to the 0.9500s or even towards the highest high in towards the 0.9800-level. Let’s go ahead and take. Well, actually zoom in here on the Daily Chart so we can get a closer view here of that green-shaded area, and this is what we always look for. Clues or indicators of reversal. And if you look at yesterday’s candlestick, and this is a clear clue of potential reversal, this shooting star candlestick that we see here. We see the smaller blue candle, the larger wick on top, giving us an indication that the buyers were in control for a period of time. That’s the long wick or high point of the candle, and then all of a sudden there was this influx of sellers that drove it back down underneath the green-shaded area.
So, again, that is a clear indication of potential reversal. It’s not a guarantee of reversal. There’s no guarantees in the market, but it’s a clear clue to potential reversal. So, for me, as long as it stays underneath the highest high – the shooting star candlestick there -, within or under the green zone, this becomes a selling opportunities on rallies to resistance and targeting back down towards the yellow-shaded area. And I’m very discouraged to buy it right now because we are sitting here under the green zone and we see that clear clue to reversal with the shooting star candlestick from yesterday.
Let’s go ahead and take it down to the 4-Hour Chart. We’ve already seen, again, a pullback from the highest highs, now settled down underneath the green-shaded area, just underneath the 0.9390-level. We even see the current 4-hour candlestick with this long wick on the top. So, again, as long as it stays within or under this green-shaded area, I’m looking for selling opportunities within or under the green-shaded area to go back down. Fibonacci. Multiple instances of Fibonacci here, but again, we’re targeting back down to the yellow-shaded area with any sells that you might decide to take.
The only thing that changes this scenario overall for the AUDUSD is two things. When do you buy this currency pair in the direction of the trend? It either dips all the way back down into support, which I’ve already listed out as down there towards the 0.9280-level and the yellow-shaded area, or it finally breaks back above the green zone. But for the time being, neither one of those things have happened. I’m seeing clues to resistance and clues to reversal with the shooting star candlestick on the Daily Chart.
Now, I know that the trend bar at the bottom of the chart, the Forex Black Book trend bar is green. However, we can still look at those Forex Black Book signal arrows to tell us what the momentum right now for the currency pair is. Going through the life of the uptrend, you could see where the red arrows were, where the market stalled or hesitated, or even went down for a period of time. Just follow it back in time. So, you see that hesitation. Bottom left-hand side of the chart. And it went down for a short period, even though the bar was green. Then it went green arrows and went back up again. Red arrow. Went down for a period. Green arrow. Went back up. Red arrow. Went down. Green arrow. Back up. Couple of red arrows here in the period of congestion. Couple of yellow arrows here in the period of congestion. Broke out and started going back up.
Now we see a new red arrow. It could be our second clue to potential reversal and a change in the momentum for the currency pair. Of course what we’d like to see over the next week or so is some more bearish movement. The trend bar turned red, or at least dark green, showing us that there would be some more bearish movement. We’re going to have to wait until next week to see that. But a clear clue to potential shift of momentum with the red arrow. We know the shooting star is there. So, as long as it stays within or under the green zone, selling into resistance, targeting back to the yellow zone will be the main focus today for the AUDUSD.
