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AUDUSD Bearish Sub 1.0465- Technical Setup Offers Clear Scalp Targets

AUDUSD Bearish Sub 1.0465- Technical Setup Offers Clear Scalp Targets

Michael Boutros, Strategist

We have continued to aggressively scalp downside targets in the AUD/USD with the recent run-up offering favorable positioning on shorts. While the decline off the February highs has been one of magnitude, the gradual slope of the decline bodes well for further aussie losses and is constructive for a bear market with a ‘panic’ decline (sharp sell-off) solidifying our bearish bias. As noted in Jamie Saettele’s weekly technical forecast, “A panic style decline right off the top is not to be trusted.”

AUDUSD Daily Chart

AUDUSD_Bearish_Sub_1.0465-_Technical_Setup_Offers_Clear_Scalp_Targets_body_Picture_2.png, AUDUSD Bearish Sub 1.0465- Technical Setup Offers Clear Scalp Targets

A look at the encompassing structure sees the aussie trading within the confines of a well-defined descending channel formation dating back to March 6th with the pair holding just above the 50% Fibonacci retracement taken from the December 15th advance at 1.0358. Topside advances are governed by the confluence of channel resistance and the 100-day moving average at 1.0430 with a breach above critical resistance at the April high at 1.0465 negating our medium-term bearish bias on the aussie. The initial daily objective is eyed at the 61.8% retracement at 1.0240.

AUDUSD Scalp Chart

AUDUSD_Bearish_Sub_1.0465-_Technical_Setup_Offers_Clear_Scalp_Targets_body_Picture_1.png, AUDUSD Bearish Sub 1.0465- Technical Setup Offers Clear Scalp Targets

Our scalp chart shows the AUD/USD continuing to trade within the confined of a wedge formation with the pair holding just below interim resistance at the 38.2% Fibonacci retracement taken form the April 10th advance at 1.0365. Initial support stands at the confluence of trendline support and the 50% retracement at 1.0340 with a break here eyeing subsequent floors at the 61.8% retracement at 1.0310, 1.0290, the 78.6% retracement at 1.0275 and 1.0250. A break below our bottom limit at the 100% retracement at 1.0225 offers further conviction on our directional bias with such a scenario eyeing extended targets at the 1.02-figure and 1.0175.

Interim resistance stands at 1.0365 backed closely by our topside limit at the 23.6% retracement at the 1.04-handle. If this level is compromised look for the aussie to test the April high at 1.0465 with a breach here negating our bias, eyeing extended break targets at the 1.05-figure and the 50-day moving average at 1.0530. A daily average true range of 98.13 yields profit targets of 21-23 pips depending on entry. Should ATR pull back dramatically, adjust profit targets as needed to ensure more feasible scalps.

*Note the scalp will not be active until a confirmed break below 1.0340 or a rebound off 1.0365 or subsequent resistance level with RSI conviction. We will remain flexible with our bias with a break above our topside limit at the 1.04-handle eying topside targets.

Key Thresholds

Entry/Exit Targets

Timeframe

Level

Significance

Resistance 1 Target

30min

1.0365

38.2% Fib Retracement

Topside Limit

30min

1.0400

23.6% Fib Retracement

Break Target 1

30min

1.0430

Soft Res / 100DMA

Break Target 2

30min

1.0450

0% Fib Retracement

Critical Resistance

30min

1.0465

April High

Extended Break Target 1

30min

1.0500

Soft Resistance

Extended Break Target 2

30min

1.0530

50DMA

Support Target 1

30min

1.0340

50% Fib Retracement

Support Target 2

30min

1.0310

61.8% Fib Retracement

Support Target 3

30min

1.0290

Soft Support

Support Target 4

30min

1.0273

78.6% Fib Retracement

Support Target 5

30min

1.0250

Soft Support

Bottom Limit

30min

1.0225

100% Fib Retracement

Extended Break-Target

30min

1.0200

Soft Support

Average True Range

Daily

98.13

Profit Targets 21-23 pips

---Written by Michael Boutros, Currency Strategist with DailyFX.com

Join Michael on Thursday morning for a Live Scalping Webinar at 1230GMT (8:30ET) to cover this scalp and more.

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex

To be added to Michael’s distribution list, send an email with the subject line “Distribution List”

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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