The AUD/USD seems to be off and running today buoyed by a lift with the iron ore price. The Aussie has been range bound within a trading channel defined by 0.795 and 0.755 for almost three months now. This recent bout of US$ weakness might just help to keep this pair supported but there is major resistance ahead at 0.795. This 0.795 resistance is shaped by the confluence of 4 different technical factors.
A/U daily: this chart shows quite clearly how price has been range-bound between 0.795 and 0.755 for almost 3 months. The 0.795 is the next clear level of trend line resistance here:
A/U monthly: the monthly chart shows the 0.795 level is also a key S/R region from two other perspective as well:
- It is the level of the 61.8% retracement fib region of the 2008-2011 swing high move.
- It is the level of the 50% retracement fib region of the 2001-2011 swing high move.
Thus, some traders will be looking for price to simply pull back to test this key S/R region. They will look for price to react here and then for further clues to SHORT this pair:
A/U daily Cloud: The A/U is already trading above the 4hr Cloud but is currently within the daily Cloud. The top of the daily Cloud is a touch under the 0.795 level and so this resistance zone is critical from an Ichimoku perspective as well.
Summary: The A/U is currently range bound between 0.755 and 0.795 and has been for almost three months. Recent US$ weakness and a boost in the iron ore price is helping to lift this pair. Major resistance lies ahead for the AUD/USD at 0.795 as this is:
- trend line resistance.
- two separate fib resistance levels and
- Ichimoku Cloud resistance.
Clearly, any break and hold above 0.795 would have to be seen as a rather bullish signal.
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