Ready for your first trade this week?
If you’re still looking for setups to trade, then you’ll want to check out AUD/USD’s SMA crossover while in a consolidation.
Let’s take a closer look at the 1-hour chart:
AUD/USD: 1-hour
I don’t know if you’ve noticed, but Aussie bulls did a great job of defending the .6380 support last week. This meant that AUD/USD has stopped making lower highs and lower lows for the first time since the pair got rejected from the .6900 handle in mid-July.
Does this mean that AUD/USD is ready for a bullish reversal?
The 100 SMA crossing above the 200 SMA suggests that AUD bulls may be on to something. After all, we haven’t seen an SMA crossover since before AUD/USD dropped by at least 400 pips a month ago.
AUD bulls may also find support from Australia’s better-than-expected retail sales report AND China’s equities getting a bump from China’s Ministry of Finance and the State Taxation Administration boosting its capital markets with lower stamp duties and lower margin requirements.
And then there’s Powell’s Jackson Hole speech where he shared that he and his gang would “proceed carefully” with their next monetary policy changes, which some traders took to mean “not as hawkish” and mildly anti-USD.
Before you buy AUD/USD like there’s no tomorrow, though, you should note that AUD/USD is still trading below the SMAs and a mid-range resistance zone.
And why not? The .6440 area conveniently lines up with half of AUD/USD’s average daily volatility so it’s no surprise that AUD bulls have lost some momentum.
AUD/USD may also find it hard to gain bullish traction while the U.K. markets are out on a bank holiday.
Depending on your risk appetite, you can consider buying AUD/USD as soon as it trades consistently above the .6490 resistance. You can also consider long trades at retest of the .6450 mid-range and .6490 range resistance levels if you’re not sure about a bullish reversal.
The .6600 previous resistance zone could make for a good profit target but you can also aim for the .6700 or .6740 previous areas of interest if there’s enough momentum.
