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AUDUSD Scalps Target Head and Shoulders Break- Bearish Sub 9236

AUDUSD Scalps Target Head and Shoulders Break- Bearish Sub 9236

2014-09-10 20:21:00
Michael Boutros, Technical Strategist
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Talking Points

AUDUSD Daily Chart

AUDUSD Scalps Target Head and Shoulders Break- Bearish Sub 9236

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • AUDUSD trading within confines of Andrew’s Pitchfork formation off the late July High
  • Break below key support / H&S neckline at 9181-9206- bearish
  • Near-term bearish invalidation at 9236- break targets objectives at into 9335 / pitchfork resistance
  • Support objectives at 9080, 8970/82 & 8911
  • Daily RSI break sub-40 (first directional break since November)- bearish
  • Momentum signature at lowest levels since Jan
  • Event Risk Ahead: Australian Employment tonight and US Retail Sales & University of Michigan Confidence Surveys on Friday

AUDUSD 30min Chart

AUDUSD Scalps Target Head and Shoulders Break- Bearish Sub 9236

Notes: The Aussie broke below the Andrew’s Pitchfork bisector line as well as a key support zone and the neckline of a head and shoulders formation at 9180-9206. Objectively, this move also took out the initial monthly opening range lows and shifts the bias lower heading into close of September trade. The focus remains weighted to the downside while below the confluence of the 61.8% extension off the yearly highs and the August lows at ~9236.

Bottom line: looking to sell rallies while below 9236 with only a breach above 9260 suggesting that a retest of the September opening range highs / pitchfork resistance may be on the cards before we head lower. Key near-term support rests at 9080 with a break below eyeing subsequent support targets into the longer-term head and shoulders objective.

Note that the average true range has remained rather tight here so we’ll increase the profit targets to 1/3 of the daily ATR- this puts us at approximately 17-19pips per scalp. Caution is warranted heading into event risk out of Australia this week and the US on Friday with the data releases likely to fuel added volatility in Aussie and US Dollar crosses.Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Technical Relevance

Resistance Target 1

Daily / 30min

9181

38.2% Retracement & 200DMA

Resistance Target 2

Daily / 30min

9205

50% Retracement / April & May Lows

Bearish Invalidation

Daily / 30min

9236

61.8% Ext / August Lows

Break Target 1

Daily / 30min

9262

September ORL / March Close High

Break Target 2

30min

9300

38.2% Ext / Psychological Level

Break Target 3

Daily / 30min

9333/36

50 & 100DMAs / 61.8% Retracement

Break Target 4

30min

9400/05

September ORH / 2009 High / (2011 Lows 9386)

Break Target 5

Daily

9495 – 9500

2014 High / 76.4% Retracement

Support Target 1

30min

9136

100% Extension

Support Target 2

30min

9111

Weekly Low

Bullish Invalidation

Daily / 30min

9080/83

50% Retracement / January, February High

Break Target 1

30min

9033

S3 Monthly Pivot / Soft Support

Break Target 2

Daily / 30min

8973/82

61.8% Retrace / 1.618% Ext

Break Target 3

Daily

8911

H&S Measure Objective

Average True Range

Daily (20)

58

Profit Targets 17-19pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

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

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars this week Tuesday – Thursday on DailyFX Plus (Exclusive of Live Clients) at 15:30 GMT (11:30ET)

Interested in learning about Fibonacci? Watch this Video

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