- AUD/USD bears are back in the game and eye a downside daily extension.
- Risk events coming to the foreground make for a treacherous playing field.
As per the prior day's analysis, AUD/USD Price Analysis: Bulls coming up for their last breath? the bears did indeed step in as projected which has forced the price back into the centre of a familiar 4-hour range.
AUD/USD has been analysed as technically bearish in a series of articles as follows:
- Chart of the Week: Commodity currencies in focus, bears in control
- AUD/USD downside compelling for the days ahead
- AUD/USD Price Analysis: Bulls coming up for their last breath?
- Aussie Covid spread tainting bullish appetite in AUD
In the most recent of the price action analysis, AUD/USD Price Analysis: Bulls coming up for their last breath? shorts were sweating as the price rallied against the position as follows making for a trapped scenario on the 4-hour chart:
However, in the article, it was explained how to manage such a scenario.
At this juncture, the most prudent action from the bears would be to move their take profit target to entry and get out at best breakeven on a restest of the entry point. In doing so, they live to trade another day.
As a result, short positions would now be covered for a breakeven scenario:
Live market, 4-hour chart
At this juncture, the price is sideways and there is nothing to do until, as explained in the prior analysis, ''on a subsequent retest below fresh support structure, the bears will be back in control.''
''The bears would be able to position for the second attempt of a downside extension, as per the original analysis from the newly formed resistance structure on the 4-hour time frame.''
As per the prior article, ''on a subsequent retest below fresh support structure, the bears will be back in control.
The bears would be able to position for the second attempt of a downside extension, as per the original analysis from the newly formed resistance structure on the 4-hour time frame: Chart of the Week: Commodity currencies in focus, bears in control.''
In the chart above, the price has formed a fresh 4-hour lower resistance structure near 0.7370 and the 61.8% Fibonacci retracement confluence.
Bears can look to engage again on a break of support between 0.7330/40 with a confirming lower close.
With that being said, two major risk events are on the horizon.
Aussie Consumer Price Index and the Federal Reserve increase the prospects of high volatility which makes for a riskier set-up.
A position at reduced risk could be the solution.
With a focus on all that is negative for the Aussie economy and currency, the bears will be hopeful of a benign CPI event that could give way to further bearish pressures.
The best-case scenario would be for a breakeven short positing into the Fed, where quite frankly, anything could happen in markets in response to the outcome.
On the upside for Aussie bears, the US dollar could benefit from a two-fold risk-off and hawkish-hold outcome which should see AUD/USD lower in line with the technical analysis.
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