The AUDUSD is looking to test the 100 hour MA at the 1.0221 level (high reached 1.02178). The price tested this MA on Friday on a few occassions but failed (see blue line in the chart above). The price has closed below the MA since September 28th. As a result, I am not surprised to see the selling on the 1st test.
Having said that, if the level is breached it would open the door for a further move higher that could see the price move to the next key target at the 1.02715 level. This is where highs from last week and where the 38.2% of the move down from September 28th is located (see chart above).
The move higher today got it’s clues earlier in the day when the move to new lows failed. On the second look lower (see chart below), the price held Friday’s low and that is all that was needed to switch the traders intraday bias toward the upside. If the price can not go lower, it has to go higher. The price based off the 100 bar MA (blue line below) and has been above that moving average since that time. Traders will now use this moving average to help define risk on the downside- stay above the MA and the bias remains bullish, move below and the bias is bearish. The 100 bar MA currently comes in at the 1.0191 level (and moving higher).
I am not surprised to see sellers against the 1.0221 level on the first test. Risk is defined and limited. The 100 hour MA is a moving average followed by the market traders. Shorts/profit takers can and have been opened against the level. However, there are reasons to be constructive on dips as well. Look for the two way action to continue until either the buyers (above 1.0221) or sellers (below 1.0191) take firm control of the trend. In between, take your pips near extremes and be happy.
