Last week, we looked at the AUD/USD and anticipated buyers on the dip.We looked at the 0.9380-0.94 as an area of possible buyers. We also anticipated the RSI to hold and turn up above 60. These two expectations have materialized as price bounced from the 0.9385 area back above 0.94 heading into the 7/28 US session. Note that this also shows a slingshot, which is when price crosses over key moving averages and respects them as support/resistance. In this case, if the moving averages act as support, there is a bullish outlook toward the 0.95 handle.
AUD/USD 4H Chart:
Reward to risk: Just to reiterate the risk profile, let's say we put in a buy order at 0.94 now. If this is triggered, the potential reward to 0.95 is 100 pips. If we put a stop at 0.9370, we have a risk of 30 pips, which make the reward to risk slightly better than 3:1.
If price fails to push back above 0.9420, an intra-session resistance, then the bullish outlook is in trouble. Then a break below 0.9380 should signal near-term bearish outlook toward the 0.9320-40 support area. This will be a key area defending a bullish trend in 2014 that has not yet been violated. A break below 0.9320 would be the first sign of price topping.
AUD/USD Daily Chart 7/28:
AUD/USD 4H Chart:
Reward to risk: Just to reiterate the risk profile, let's say we put in a buy order at 0.94 now. If this is triggered, the potential reward to 0.95 is 100 pips. If we put a stop at 0.9370, we have a risk of 30 pips, which make the reward to risk slightly better than 3:1.
If price fails to push back above 0.9420, an intra-session resistance, then the bullish outlook is in trouble. Then a break below 0.9380 should signal near-term bearish outlook toward the 0.9320-40 support area. This will be a key area defending a bullish trend in 2014 that has not yet been violated. A break below 0.9320 would be the first sign of price topping.
AUD/USD Daily Chart 7/28:
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