AUDUSD at a tipping point

AUDUSD at a tipping point

Good morning everyone,

to illustrate the interesting conditions in the AUDUSD at the moment I want to look at the daily chart and the 30 minute chart. I am a big fan of looking at multiple timeframes and I think this will serve to illustrate why it can be of great benefit to traders.

By looking at the ADX line here you would suggest that the AUDUSD is drifting at the moment confined in a fairly loose channel. The channel though is the thing that strikes me as the most interesting. Price has oscillated reasonably smoothly from the bottom to the top of late but you can see that there is greater resistance at the moment which has the price pressed up against the lower bound. You can see that price has made a couple of penetrations of support but hasnt been able to go on with it in the last week. It seems that we may be in for another attempt soon.

I like to use the 30 period moving average as something of a barometer when looking at most FX charts so you can see that the current rate is below this level on both time frames which is broadly bearish. In the shorter term however there is a more consistent direction going on as seen by looking again at the elevated ADX. This can often be an indicator of a reversal to occur.

For mine if I were looking to trade short I would aim to do it at a closer level to the moving average line which I think is quite representative of 'value'. My bias will remain short unless the moving average begins pointing higher as well as a good reversal on the MACD. I would look to see price touch and confirm around the MA by the formation of a peak.

The bigger picture will be to watch the behaviour on the daily to see what happens there - you can reverse your opinion on the 30 min quickly but the daily is a matter of turning a bigger ship. I will keep you informed on the 30 min if there is a change in the wider direction particularly if there is an update on the daily.