Today we saw a confirmed change of trend to the upside in the AUD/USD with a higher high and higher low. But the change of trend has occurred on a Spinning Top type of candle which tends to denote indecision in a market. That is mainly due to the contraction in the size of the body of the candle. The size of the body denotes net momentum between the open and close for the period and in this case it suggests that net momentum is not as great as it was previously. This does raise some doubt about the ability of the buyers to continue pushing the trend higher.
Now, having said that, we don't see any strength from the sellers. The colour of the body remains white, so, net momentum remains up, albeit small and the buyers have still managed to maintain a moderate amount of control by closing between the high and mid-range.
Over the last two days, we have seen probes below the Kijun Sen indicator, which has held as support, with the sellers losing commitment below there. We should continue to use it as our benchmark, at 0.79259, at the moment and a negative close below there could spell the end of this medium term bullishness we've seen over the last 4 days, when the AUD/USD bounced off the 0.78 level.
If the buyers can manage to remain keen, there is a possibility of a move to the internal major Andrews Pitchfork line, which is very close to the round number 0.80. This is a level where we have seen the buyers lose commitment in recent times as evidenced by the large shadows in late July. So, an eventual bullish close above there could see the AUD/USD eventually move to significantly higher levels.
We've seen selling today in the AUD/USD, with the sellers taking back control on a black bodied candle. Buyers were strong enough to extend the trend further to the upside but lost control and commitment by the end of the trading day to end very close to the lower 1StD Bollinger Band. The inability of the buyers to close within the upper half of the bands suggests that the sellers are perhaps still the stronger party in this market at the moment in a longer time frame.
Price action was also rejected from the minor-scale Andrews Pitchfork resistance at the first and second upper warning lines.
At the moment, in the new trading session, we are seeing perhaps a new 1st time frame down trend form with a lower high and lower low but support is coming in at the lower band at 0.78750.
The bands are looking fairly squeezed at the moment, representing a low volatility situation. We know that volatility is cyclical and will be aware that volatility may come into the market as a new trending move. We should be on the lookout for a bearish close below the lower band if the 2nd time frame down trend is going to resume in a similar strong bearish tone as two or three days ago.
Also be on the lookout for solid support at the upper Pitchfork line (green line) at approximately 0.78560.