|

AUD/USD Price Analysis: Inside day Friday opens risk of a lower close on Monday, 0.7050 eyed

  • If Asia opens on the offer then a downside extension to test the previous day's lows near 0.7080 and then 0.7070 is eyed.
  • There are risks of a move towards 0.7050 for the initial balance for the week.
  • The daily average true range is around 80 pips, so a move much higher than 0.7130 would not be expected from a bearish perspective. 

AUD/USD was the best performer for the G7 last week and AUD/USD bulls could be trapped up high for the week ahead which holds a number of key data events. The following illustrates a bearish bias for the initial balance of the week, Monday with 0.7050 eyed. 

AUD/USD H1 chart

As per the above daily template on the hourly chart, we can see that the pair is consolidating at the top of 5 days of higher closes followed by the first red day, FRD, on Friday. An FRD is usually followed by a second, or third day of bearish closes which gives the bias for the day ahead, down.  This can serve to help traders identify higher probability trade setups as they plan for the day, if not the day's ahead. In this particular scenario, Friday closed as an inside day. Inside days are often followed by a breakout of the highs or lows, one way or another.

During the last hours of Friday's business, there was a pump up from the lows of the day (that followed the dump) as follows:

As illustrated, the break of structure, BoS, around 0.7100 was followed by a correction, the pump, into a 61.8% Fibonacci retracement that has acted as resistance on a stop hunt above 0.7100. This could be the makings of the opening dump in Asia. 

If Asia opens on the offer then a downside extension to test the previous day's lows near 0.7080 with eyes lower to 0.7070 (-272% Fibo). This is where bulls would be expected to engage in London to move into the Asian session's range and if the day is going to close lower then New York traders will be looking to fade the market on tests of 0.7100 and a close below Friday's close of 0.7108.

This leaves risks of a move towards 0.7050 for the initial balance for the week. The daily average true range is around 80 pips, so a move much higher than 0.7130 would not be expected whereas 0.7050 is eyed in this bearish thesis. 

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD rebounds after falling toward 1.1700

EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.

GBP/USD steadies below 1.3400 as traders assess BoE policy outlook

Following Thursday's volatile session, GBP/USD moves sideways below 1.3400 on Friday. Investors reassess the Bank of England's policy oıtlook after the MPC decided to cut the interest rate by 25 bps by a slim margin. Meanwhile, the improving risk mood helps the pair hold its ground.

Gold stays below $4,350, looks to post small weekly gains

Gold struggles to gather recovery momentum and stays below $4,350 in the second half of the day on Friday, as the benchmark 10-year US Treasury bond yield edges higher. Nevertheless, the precious metal remains on track to end the week with modest gains as markets gear up for the holiday season.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid bearish market conditions

Bitcoin (BTC) is edging higher, trading above $88,000 at the time of writing on Monday. Altcoins, including Ethereum (ETH) and Ripple (XRP), are following in BTC’s footsteps, experiencing relief rebounds following a volatile week.

How much can one month of soft inflation change the Fed’s mind?

One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures. 

XRP rebounds amid ETF inflows and declining retail demand demand

XRP rebounds as bulls target a short-term breakout above $2.00 on Friday. XRP ETFs record the highest inflow since December 8, signaling growing institutional appetite.