AUD/USD Needs to Make a Decision

By: Doug Rosen

This pair has been in a bearish mode the last couple weeks, however, it appears to be consolidating a bit and I think that is due to the weekly 55 ema acting as support. In addition, this pair poked out of the lower Bollinger Band as it touched the 55 ema so I think this is the cause of the recent consolidation.



Looking at the daily chart the Stochastics is in the oversold region and price is a bit extended outside the lower Bollinger Band and yesterdays lower wick was rather long, a sign or buy action or profit taking. The daily chart does look bearish however since it has been riding the daily 5 ema downward and the daily 5 has just crossed below the 233 ema, this looks very bearish to me. There is really no reason for me to think this bearish mode is over yet but I do think price needs to meet up with the daily 5 ema which is about 100 Pips up before it can continue its path downward.



Looking at the 4 hour we seem to have bottomed out around 1.0170 which just so happens to be a fib level of last month's range. Angle and separation of the ema's to the downside are wide and price continues to ride the 4 hour 5 ema downward with the 13 ema stepping in when the 5 gets breached. The 4 hour Stochastics is at the bottom of the trade zone and wants to cross down and into the oversold zone which is bearish because it means that the Stochastics just wants to stay down. The lower 4 hour Bollinger Band is also pointing down giving price to continue downward.



Looking at the hourly chart I see that the 5 ema has crossed below the other ema's and is controlling price downward and the lower Bollinger Band is also opened a bit. I would like to note however that price is just above the weekly M0 Pivot Point. Looking at the 15 Minute chart Stochastics is in the oversold zone crossing its way up and out and a reversal candle formation has occurred. The 5 ema seems to be rolling over to the upside, lodging itself just below price trying to give it a lift, but the 21 ema is just above price trying to push it back down.

Taking all this in consideration price is up against very strong support with bearish forces trying to break support. I think price will head up just a bit to around 1.0250 where it will fib and meet up witht he 144 ema and upper Bollinger Band Then should continue its way downward. On the other hand, the weekly 55 ema is in control of price and I expect a fight between the weekly 5 and 55 ema's before continued direction can be established. As I say in the title, it is at the point where it needs to make a decision. Either break the 1.0160 level and keep falling or bounce upward and break 1.0300 level and keep rising.