Developing Story.
- The monthly chart shows that the price is now taking on a supply zone, albeit with a good percentage drop already done.
- AUD/USD bulls are lurking looking for a high probability setup for a long seeing trading opportunity.
There is something for both the bulls and the bears in a top-down analysis of AUD/USD, but the compelling price action has appeared on the daily chart from which a long bias exists.
Bulls will monitor the price action from a 4-hour time period to look for a bullish environment and higher probabilities of a successful swing-trading opportunity.
The following is a market structure analysis conducted on the monthly, weekly, daily and 4-hour time frames with an illustration of what a long entry might look like for a 1:5 risk to reward setup.
Monthly resistance
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The monthly chart actually offers a bearish outlook as the price struggles in the distribution zone following months of non-stop bullish monthly closes.
A continuation of the distribution offers the potential for a short swing trade IF the daily setup doesn’t evolve on the 4HR time frame.
But first, let’s keep monitoring for the long, (continue reading).
Monthly Fib targets and upside bias
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If bears stay in control, the various Fibonaccis highlighted offer confluence target points.
Weekly chart support target
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The first weekly target is evident in the above graph. This level would be the first port of call for a short.
Weekly chart’s support zones
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However, given the bullish trajectory, the support targets could give rise to long entry setups.
The daily chart offers long trade setup prospects
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For the meantime, bulls are waiting patiently for an opportunity in a third impulsive wave to develop for a daily chart swing trade.
4HR prospects for the third wave
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The price is below the structure, so there is still some work to be done by the bulls at this juncture.
1:5 R/R swing-trade setup
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As can be seen, the environment us still not quite bullish with price consolidating below the 21 4-hour EMA.
However, on a break higher and a retest of the 21 EMA, and/or support structure, bulls can look for an entry to target a 1:5 risk to reward and high probability trade.
This story will continue and price action will be monitored on the 4-hour time frame with updates along the way…
