If one looks at the AUDUSD chart over the past few days / weeks, it is clear that there is very strong buying demand at 1.0380. On the topside there is determined selling, which has been getting lower and lower. On the daily chart this pair is developing a ’rounded top’ formation. It still has a few more days to go to be complete in the formal sense. A decisive break and close below of the 1.0350 level would confirm this rounded top formation. If this interpretation is correct, we will see the AUD at 0.98 soon after this formation is validated, and perhaps even go down to 0.95.
OK, this thinking aloud in writing was to develop a tactic for trading the AUDUSD. I am short from 1.0425. I have now entered a limit order to close this short at 1.0385. The pair is currently trading at 1.0391/92.
My tactic for trading this pair will be to enter a short whenever the AUD spikes up to above 1.0420 / 30, and cover at 1.0380. Enter short again if the pair breaks below 1.0370 and has at least an hourly close below that level.