AUD/USD: The Daily Chart above is an example of why Technical Analysis works and often well. Last month I wrote that 'Overall, favour a further try higher and will change this to a bullish bullet point but as I have a twinge from the possible Tweezer Top, I'll place a question mark against it.'. We did indeed have a temporary Tweezer Top and prices fell away for the next week but eventually decided to maintain the Bullish incentive. The move higher was potentially marked to go to the 0.7950 area as a Halfway Hesitation, but also I noted 'we have a few things to bear in mind. Firstly, there isn't much resistance till 0.7750(dynamic) where the Upper Tine of the Apr2016 - Nov 2016 Schiff Pitchfork Upper Tine is currently at.' This is where we ended up as a high for the year so far. The market high at 0.7741 and the Upper Tine at the time at 0.7744. The actual day was also more spectacular as a failure because it was a Key Reversal Up that failed, obviously in the wrong place as well.
Since then we've had the dramatic fall last Thursday and a slight recovery Friday. Why the recovery Friday? Well, the close on Thursday was on the first real Fib support at 0.7570 and Friday's low was at the first real Fib (the 61.8% Fib) of the recent move up at 0.7538. Additionally nearby was the rising Long MA (currently 0.7526) and flatlining Medium MA (currently 0.7509) plus the lesser, but still rapidly rising Short/Medium MA (currently 0.7501) likely to be adjacent to the other two shortly.
These three MAs are (for want of a better phrase) the knuckles of the iron fist in the velvet glove of support. Finally, we also have two 50% Fibs at 0.7488 and 0.7464 which basically make up the rest of the fist. That is why I suggest Friday's action reacted the way it did to the move lower rather than following on down. It doesn't mean that we will not head lower, the market does what it wishes to do and no support can hold back a strong enough tide. Instead, it means it may be tougher to breach that perhaps initially anticipated. So that is the support dealt with, what about resistance? That is currently at 0.7602, 0.7614, 0.7645, 0.7699 (combined), 0.7732 and 0.7741. Given that we have two MAs rising, one flatlining and one turning down, I'm minded to maintain the mildly Bullish bullet point above until I receive a clearer idea of what is going on with any test lower.
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