Aussie Dollar (AUD) pairs are showing some temporary weakness in the 15 minutes to the hourly timeframe, which may result in a short-term reversal. In this post, I analyzed the market’s supply and demand on the 3 of the most traded AUD pairs: AUD/USD, EUR/AUD and GBP/AUD.
In this pair there was supply at new highs, which often pinpoints the beginning of a downtrend – in new (relative) market highs, there just isn’t trading due to old resistances, and so any supply sign tends to carry more weight. Before looking for a short I would like to see another descending top (lower than the last 2) on low volume, a downtrend confirmation.
Note: Non-farm employment change and unemployment rate numbers are coming out tomorrow for USD at 1:30 PM GMT
In EUR/AUD Hourly chart, the price is still moving in sideways, but the volumes are telling another story. They spiked on the market lows, which means there was mostly demand in the last 2 days. A low volume rally to 1.44 would be the trigger for a high probability long trade.
This pair is near a long-term support at 1.68, and just showed a major shake-out (blue dot). It’s probable that it may form an inverse head-and-shoulders, that given the accumulation, would show strength. Even if that doesn’t happen, though, a dip to around 1.687 (previous low) on low volume would still give a long opportunity with a favorable risk:reward.
AUD Pairs are undergoing a correction for the past few days. Boosted by FOMC on the past Friday, AUD/USD broke the down trendline that was in place since April, on furious volume, which is often a good indication of strength in critical areas. Reaching higher ground, the volumes showed some supply – first a churn (narrow range bar with high volume) and an upthrust (bar to trigger more buying and short stop-losses). After such a strong movement, a correction is the market taking a breath, and it can provide more trading opportunities. This correction has given yet no signs of stopping, and I expect a resistance to be found near the break-out’s bar, where many large traders went in on the market, which is where I’ll be looking for a price reversal.
This pairs looks more interesting than AUD/USD to trade on the short-term. Last week there was a shake-out of the 78.43 support, which likely triggered many stop-losses and sell-stops, that provided liquidity for institutional traders to buy it, and reverse the prices. The buying is there, but are there still many sellers at these prices? To know that, we have to pay attention to the volumes and price ranges – narrow ranged bars or low volume ones would show that the reaction is going to stop, and that we’ll see higher prices.