AUDUSDI wrote in my previous piece on this currency pair on 27th April that the price was still making lower lows and lower highs, which suggested the medium-term bearish trend was still in force.
Therefore, I was looking for a bearish reversal at 0.7235, which would present an attractive short trade entry point.
I was correct about the primary direction of the day, as the price fell over the day and reached as low as the support level which I had identified at 0.7082 shortly before the Tokyo close, but the price gave a nice short-term long trade from that level when it was reached, signaling its intention to move higher with a bullish pin bar on the hourly chart.
The price now is back where it was one week ago. The RBA just announced a 0.25% rate hike which some analysts had been expecting, but which surprised many who had been expecting a hike of only 0.15%. This caused a short-term bullish price spike of approximately 1%, but this quickly ended within 45 minutes, with the price retracing back to its consolidation area just above the nearest support level at 0.7082.
It seems clear that this support level at 0.7082 is going to be today’s pivotal point. The price is clearly within a long-term bearish trend, so the highest probability setup that might emerge today would probably be a short trade entry following the price getting established below 0.7082. This would likely trigger a further fall to the 0.7006 area which could be strong long-term support.
On the other hand, if 0.7082 holds as support, we will probably see the price rise over the short term.
