Whether or not the Aussie can build up on recent gains, much of it will depend on the ability and commitment from long players to take the last obvious swing high at 1.0348/50, which aligns with Feb 7/Dec 27 broken-support-turned-resistance. If buyers can regain that level, the volatile downtrend structure will start teetering, and sellers potentially stepping out of the market.
One interesting pattern identified by Fan Yang, chief technical analyst at FXTimes, is that the maximum number of pips achieved by buyers in each corrective along 2013, where four meaningful pullbacks can be observed have been 90+, and under 100 pips. "Today’s pullback has been about 95 pips so far" he notes.
According to Mr. Yang, "as a trader, you should probably be ready for both the yes and no answer. Yes means following the recently bearish trend after this 90+ pip pullback. However, a pullback above 100 pips could change things."
Fan prefers to err on the side of caution and suggests not fighting the downtrend until a push above 1.0360, and the falling channel resistance before considering a bullish outlook, which may allow further recovery to 1.0450-60, he says. In turn, "the bearish scenario has 1.0150-1.0165 key range lows in sight" he adds.
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