Scalping the AUDUSD Correction- Longs Favored Above 9060
Talking Points
AUDUSD setup targets topside correction
Looking to buy dips/breaks of resistance into 9200, while above 9060/70
Event risk out of Australia on Wednesday & US on Thursday
AUDUSD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
AUDUSD trading within confines of well-defined descending channel formation
Rebound off technical support shifts focus higher in the near-term
Daily momentum divergence & trigger break supports correction stance
Scalp bias bullish above 9063/76
Interim resistance targets 9170 and 9200/20
Broader bias bearish below 9280
Key Events Ahead: Australia Employment Report tomorrow night and US Retail Sales on Thursday
AUDUSD Scalp Chart
Notes: The weekly opening range looks to have broken to the topside with the rebound off key technical support last week supporting our near-term corrective approach on the aussie. Longs were initiated earlier today as discussed in DailyFX on Demand with our initial target eyed at 9160/69. This region represents the 23.6% retracement of the decline off the October high, the monthly opening range high and the 61.8% near-term Fibonacci extension of the advance off last week’s low.
The setup has been clean with intra-day momentum continuing to respect the 40-threshold, keeping our focus higher. Look to buy dips / breaks of resistance while above 9060/78 with long conviction added with a breach/close above 9160/69. We’ll scale out of long exposure as we head into the 9200/20 range where short entries are favored. Only a breach above 9280 invalidates our broader bias with such a scenario risking a more meaningful recovery into subsequent resistance targets.
Note that a break below the weekly range low invalidates our near-term scalp bias and puts the broader decline off the October high back into focus. Short conviction is added with a break below key support at 8990-9000 with subsequent support targets seen at 8958, 8927 and 8890. Keep an eye out for the Australian employment report out tomorrow evening in New York where consensus estimates are calling for a print of 10K jobs for the month of November while the unemployment rate is expected to tick up to 5.8% from 5.7%. Broader USD price action might also be impacted by the US Retail Sales report the following morning and could alleviate some of the recent pressure on the greenback.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets | Timeframe | Level | Significance |
Resistance Target 1 | Daily / 30min | 9160/69 | 61.8% Exts / 23.6% Retracement |
Bearish Invalidation | Daily / 30min | 9202/16 | 61.8% Retrc / 100% Ext / Channel Resistance |
Break Target 1 | Daily / 30min | 9272/82 | 38.2% & 61.8% Retrc / 100DMA / 100% Ext |
Break Target 2 | 30min | 9307/17 | 1.618% Fib Ext / July High (9317) |
Break Target 3 | 30min | 9349 | 78.6% Retracement / Pivot |
Break Target 4 | Daily / 30min | 9373 | 50% Retracement / 50DMA |
Break Target 5 | 30min | 9400 | Big Figure / Psychological Level |
Support Target 1 | 30min | 9130 | 61.8% Fib Ext (Aug Low) / Weekly ORH* |
Support Target 2 | 30min | 9105 | Soft Support / Pivot |
Bullish Invalidation | Daily / 30min | 9062 / 78 | 78.6% Retrace & 78.6% Ext / Weekly ORL* |
Break Target 1 | 30min | 9035 | Soft Support / Pivot |
Break Target 2 | Daily / 30min | 8990 – 9000 | 1.618% Ext / 88.6% Retrace / Monthly ORL* |
Break Target 3 | Daily / 30min | 8958 | 100% Fib Extension |
Break Target 4 | Daily | 8927 | August 5th Close |
Break Target 5 | Daily / 30min | 8892 | Late August Low |
Break Target 6 | Daily / 30min | 8847 | 2013 Low (August 5th) |
Daily (20) | 94 | Profit Targets 22-25pips | |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list
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