The Australian dollar versus the US dollar currency pair recovered yesterday, October 16, after it almost touched the 0.6700 level, thus signaling that the sellers may dissipate.
Beginning with August, after printing a few lows under the psychological level of 0.6700, the price revisited 0.6800 on October 10, but retraced and, on October 16, printed a low at 0.6720 (not highlighted on the chart).
The fact the price retraced that sharply from 0.6800 on October 14, could have been considered as a loss of confidence within the buyers. However, the trained eye observes the two (now three) of higher-lows that follow the October 2 pin-bar and thus realizes that any price depreciation — even if it commenced at the key level of 0.6800 — translates into a fresh opportunity to long the market at a better price.
As a result, from the 0.6820 rate (on October 16), the bulls pushed the price even higher, printing a pin-bar on the mentioned date and preparing the road for the strong bullish movement that followed in the first half of the next day, October 17 respectively.
Even if the possibility of a strong bearish comeback from 0.6800 has to have a plan set in place, the current profile is bullish, thus favoring the piercing of 0.6800. So, after the price pierces and confirms as support the 0.6800 psychological level, 0.6858 is the first target. If this attempt results in a failure, a short can be considered only after a strong bearish pattern had been printed on the 0.6800 area and, even better, after 0.6800 is confirmed as resistance yet again. If this las scenario materializes, then 0.6700 is a fist target, followed by 0.6650.
The price managed to pierce the 23.6 Fibonacci retracement level. As long as the price oscillates above this level, the road to 38.2, and later on to 0.6855, is clear.
Even if, on the other hand, the price gets under 23.6, as long as 0.6746 is not confirmed as resistance, chances are for the bulls to endeavor in new attempts to find a way to 38.2.
If 0.6746 is eventually conquered by the bears, 0.6678 is the first target.
Levels to keep an eye on:
D1: 0.6800 0.6858 0.6700 0.6650
H4: 0.6740 0.6678 and the Fibonacci projections of 23.6 38.2 and 50.0
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