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I’m going to get started today on the Australian Dollar versus the US Dollar [AUDUSD]. Starting here on the Daily Chart, it seems like for the past few weeks we’ve been talking about this red box that you see here on this chart. Going all the way back into March, we’ve seen support down into the yellow-shaded area at the bottom of this red box and resistance up towards the top of the red box into the blue-shaded area. And that’s been, again, going all the way back into March 26.
Now, in the Trade Room, over the past few days, we’ve actually shrunken this rectangle down into this area right here, where we could see that over the past several weeks, basically the month of August, we’ve been stuck in a smaller range. A little box down here at the bottom right-hand side of the chart, where we have consistently, over the past few weeks, found resistance into the green-shaded area here on the chart. I did change the color here in the Trade Room yesterday, but the green-shaded area holding as our resistance.
You follow that green-shaded area back. You could see support here and support here and support here. So, historical supports in the green zone, and even going back to the left-hand side, historical supports in that green-shaded area now offering our zone of resistance. And we could see that through the month of August. Down into the blue-shaded area we’ve seen consistent congestion and support, and again, down into the yellow zone at the bottom of the red box. Yellow-shaded area. We could see support down there at the bottom. And those are consistent with historical supports on the left-hand side of that yellow-shaded area.
We also, over the past several days in the Trade Room, have been studying this 100-period or 100-day moving average that flows through the middle of the chart. You could see it coming up here, and guess what. It sits right at the top of our green-shaded area. So, the historical supports offering resistance. Now the moving average also coming into play right here into the 0.9340-level. And over the past few days, I’ve been saying selling into the green zone is our main objective.
Well, here we are again. We can’t get much more into the green zone than we are right now. We’re at the very top, right at 0.9340. If you’re looking for a sell opportunity under the 100-day moving average, underneath the historical resistance, then you’re at that point right now for the AUDUSD. The risk. What is the risk in this scenario? The risk is that it breaks out. It finally pushes through this 0.9340-level and starts going higher. So, plan your stop losses accordingly. If you decide to take a sell here at 0.9340, you might even go up to the orange-shaded area for your stop loss. 0.9370 or so. Again, that’s not a very bad stop loss. You’re only looking at about 30 pips if you put it just above 0.9370. 30 to 35 pips. And if it breaks out to the topside, you don’t want to stay in a sell any longer anyways because it’s likely going back up towards the 0.9400s.
So, keep that in mind. You’re selling now at 0.9340. Stops above 0.9370. If it continues to go up, you don’t want to stay in a sell any longer. It’s likely to continue all the way back into the 0.9400s. If you’re thinking about buying this currency pair, I might be a little bit cautious because of the historical nature of this level. 0.9340. The green zone. The moving average. I might be a little bit cautious about buying it right now. Again, I always say this in the Trade Room. If you’re buying, you’re buying on two reasons: dips into support or break through resistance.
We haven’t broken through resistance. We’re not at support. So, it doesn’t become your most ideal scenario for a buy scenario. Now, if it breaks through the resistance, that would become a different scenario, but right now we haven’t seen that breakout above the current resistance, and above that red box and 100-day moving average.
Forex Black Book trend bar is red. It is dark red today, but it’s still red, showing us a bearish bias. We want to take a look at the trend pattern. Lower highs, lower lows is a downtrend. Higher highs, higher lows is an uptrend. We see we have a few higher lows here, but we really haven’t consistently seen a break of these highs right here. So, I’m not concerned with that quite yet.
Also, let’s take one other thing. Let’s take Fibonacci measurement from the high here. Just the second circle that you see here. From that high, down to the current low. That also puts the 50% retracement level right around the 0.9353 level. That’s just at the top of our red box. Let’s just go ahead and take it all the way out to the top here, and that also puts the .382 now at 0.9336. That’s the top of the green zone. 50%, 0.9368. Again, right there at the top of our orange-shaded area.
So, again, the risk here in selling is that it breaks through, pushes through the next resistance, the orange zone, and continues to pressure all the way back up here. And I’m going to go ahead and draw this blue-shaded area over a little bit because that is really the ultimate high, isn’t it? You could see the historical resistance back here. Remember when I had the box drawn out here like this. Well, you could see that that’s where we would likely look for the market to go, back to the blue zone, red trend line if it breaks out of this smaller red box right here.
So, that’s some pretty decent information from the Daily Chart. It’s not going to really change it a whole lot when we get down here to the 4-Hour Chart. You could still see the little red box. You see the attempt to breakout so far of the green-shaded area. If you’re really wanting to wait for some more clues of reversal, you could wait this out. Instead of selling now, you wait for it to give you a candlestick formation that implies reversal. Could be a hanging man, shooting star, engulfing candle, or whatnot. Look for those types of clues of reversal. You could look for consistent resistance here rather than selling here, just on the challenge of this area. You could look for a new red arrow with the Forex Black Book. All of those are possible opportunities for the AUDUSD today here into this green zone, but definitely some opportunities there.
Again, I’m discouraged about buying it here into this resistance. It wouldn’t make me comfortable about buying it. We’ve also looked at this here in the Trade Room. I’ve looked at the patterns here. You could see this. You can see this. And right now you could see this. So, there’s the pattern that this trend has been in within this little red box. It touches the top and falls, touches the top and falls. Now we’re at the top again, so again, there becomes this overwhelming sense that we could look for resistance and reversal once again. It doesn’t have to. That’s why we plan our risk accordingly. Place appropriate stop loss levels. That way if it does continue to pressure higher, we minimize the loss.
Of course if you’re looking for a buy, I think it needs to go down. Back to the blue, back to the yellow-shaded area, or at minimum we need to see the breakout of that 100-day moving average on the Daily Chart. 0.9340, and we haven’t done that yet. So, definitely some things to watch for today, but I continue to have a sell bias within this red box, underneath the green-shaded area for the AUDUSD today.
