AUDUSD is in no man’s land between 1.0450 and 1.0500. It won’t take much of a move from here to either confirm or deny both the bearish and bullish arguments.
At my last update on the AUDUSD on Tuesday (“AUDUSD set for test lower?”) on Tuesday, I pointed out that the 1.0500 area likely faced a test – which it indeed did, but the even more critical area has so far failed to break: the 1.0450 level which I also drew on that chart Tuesday. Yesterday saw the AUDUSD bouncing strongly just ahead of that level and ending the day with a pattern reversal. The next session or two look critical for indicating whether we see the pair mounting an attempt on the recent 1.0600+ highs.
Chart: AUDUSD
Note yesterday’s bullish pattern reversal. Note (this is more clear on an intraday chart) that the 1.0450 area is somewhat like a head and shoulders neckline, underlining its importance. As we are in a bit of a no man’s land at the moment, the bears need a break of the 1.0450 support to argue for a more significant sell-off, while the bulls can use that level as support for an upside view. A close back above 1.0500/20 today would bolster the short-term bullish argument.
John J Hardy,
SAXO BANK