The AUDUSD is stretching to a new session low after an up-and-down trading day that has seen the price work lower in steps.
The day started with a test of the 100-hour and 100-day moving averages near 0.7038. Sellers leaned against that resistance and pushed the price lower. Initial declines toward 0.7014 and then 0.6998 attracted bounce-back rallies, but buyers could not sustain the recoveries. The latest move has extended the session low to 0.6996, taking the pair to its lowest level since October 22.
Key swing support comes into focus
The decline has brought the price just above a swing area between 0.69898 and 0.69943, going back to September 30. That area is now the next key barometer for buyers and sellers.
Buyers looking to stall the fall can lean against that support with close risk below. For sellers, getting and staying below 0.69898 would open the door for further downside momentum toward 0.6970.
Last week’s rebound stalled near the midpoint
Last week also featured two-way price action, but the upside move found a ceiling on Thursday near the 50% midpoint of the decline from the September high. That retracement came in at 0.70654, and the high reached just above it at 0.70674 before rotating lower.
Today’s rejection near the 100-day and 100-hour moving averages gave sellers the technical tilt needed to extend the decline. As long as the price remains below those moving averages near 0.7038, sellers retain control. The next step is to break the 0.69898–0.69943 swing area and keep the downside momentum going.
In the video
In this video, I show how the rejection near the 100-hour and 100-day moving averages gave sellers control and helped the AUDUSD step lower. I also outline why the 0.69898–0.69943 swing area is the next key barometer, with a break below opening the door toward 0.6970.
Trading education: Let the technical levels define your risk
A swing area gives traders a place to measure whether buyers or sellers are taking control. As the AUDUSD approaches 0.69898–0.69943, buyers can lean against that support with close risk below. However, holding support is only the first step. Buyers also need to push the price away from the area to show they are gaining traction.
For sellers, a break below support needs follow-through. Getting below the area and staying below would strengthen the bearish bias. A break that quickly reverses back above it would signal a failed break and could force sellers to cover. The lesson is to let the price action around the level define the bias, risk, and next target.
This article was written by Greg Michalowski at investinglive.com.