AUD/USD and bullish price action above .6680 are incompatible right now

aus_03
David Scutt 125
By :  ,  Market Analyst
  • AUD/USD continues to struggle despite the risk-on environment
  • Suffers another big reversal above .6680 on Thursday
  • Most Australian states break Friday for long weekend

Considering the exuberance in markets, the Aussie dollar should be surging. Rate cuts are here, there and everywhere, boosting prospects for a soft landing. Cyclicals should be leading the charge. But the Aussie dollar, the posterchild for cyclical currencies, looks more like the Pacific peso, floundering without really going anywhere.

Check out the price action on the 4H chart.

aud june 6

Like a climber on Everest above 8000m, every time AUD/USD pushes above the .6680, the move becomes starved of oxygen. Bearish engulfing candles, evening star patterns; we’ve seen plenty of near-term top patterns over the past few weeks, including another  today: a bearish pin. Like so many other forays above .6680 it simply couldn’t stick, delivering yet another ugly reversal.

Until AUD/USD manages to break and hold this level, using existing ranges remains the way to trade it.

Selling on pushes above .6680 with a tight stop is one option, allowing shorts to target support at .6629 or even .65925.  Alternatively, should the price ease back towards those targets, traders could initiate longs targeting .6680 with a tight stop below either for protection.

Aside from risk events such as Thursday’s ECB interest rate decision and Friday’s nonfarm payrolls report, those trading AUD/USD should be aware most Australian states will break Friday for a long weekend, reducing market liquidity during the Asia session tomorrow and on Monday.

Get our exclusive guide to AUD/USD trading in Q2 2024

-- Written by David Scutt

Follow David on Twitter @scutty

 

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