The Ozzie Dollar Shoots Higher, but will it Last?

AUD/USD (0.8508)

• Resistance Levels: 0.8590, 0.8670, 0.8795
• Support Levels: 0.8465, 0.8365, 0.8260

Australian Dollar shot higher after the Reserve Bank of Australia (RBA) left rates alone this morning. The recovery will be short lived and here is why.

Please refer to the above daily MT 4 chart. The AUD/USD fell to a four year low after collapsing below the key handle at 0.85. Should the fall continue, then we would need a daily close below 0.8465 to challenge 0.8365 and lower.

Should this recovery continue, highly unlikely since we have a stiff congestion zone at the current price level, then we need to clear the 0.8550 to 0.8590 area. If we get a daily close above these levels then we will challenge the next congestion area that runs from 0.8660 to 0.8670.

Let’s look at trading strategy. It I tempting to go long here but I am opting to sit on the sidelines right now. The trading range is just too narrow. It is not feasible to go long or short at this current price level as the risk to reward is negligible. I am staying flat for now as a clearer trade signal is needed.

Trading strategies are educational in nature and do not constitute trade advice. Always perform your own technical analysis to support mine before placing any trade.