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AUDUSD – Technical Analysis and Trade Ideas

AUDUSD

AUDUSD rejected back from the key weekly resistance zone

Expectations for Fed peak hawkishness derived the risk-on moods in the markets since October. As we have discussed also in the XMLive Beginners and Advanced Rooms. I am expecting a defensive move from the markets before the January Fed Interest rate decision. 

The simple logic is if the market trades the expectations and the prices of risk assets and currencies bounced up because of the weaker USD recently, now they want to see the reality on Fed Decision Wednesday. 

If the Fed confirms the market expectations by increasing interest rates with 25 bp and doesn’t sound very hawkish on the Q&A, then we could expect this to be the end of the risk-off pullback and bulls to jump positively again. 

Technically, the big 100% recovery of the losses from August 2022 is completed and we can consider that bullish bounce as the new impulse up. And since we know every impulse has its correction, we mostly hunt for short-trading opportunities at the top of that impulse. The goal is to get a good Risk-to-Reward Ratio in the major correction. 

The longer-term picture is messy with the ongoing macros, but keeping things simple and stupid suggests just waiting for the pull-back and watching for buy price action at the bottom of that correction.

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