The AUDNZD has been getting a lot attention of us price action traders the last few months dropping some really nice clear cut signals in the monster downtrend which developed. Recently the market has bounced of a strong long term monthly support level, dropped a large bearish rejection candle and is now heading back down looking to retest those important monthly lows.
On friday after the NFP release, the AUDNZD rejected a move higher into an old support level which responded as new resistance, a dictionary definition of a swing level pretty much. The market close right on the lows of Friday’s trading, leaving no lower wick what so ever, a very bearish indicator.
This is such a key level for a bearish signal to form, multiple non-correlated variable are lining up to support a short position. The swing level, the mean value, the fact the market closed lower than it’s open price and the high of the rejection candle made a lower high. There isn’t really any more boxes to tick here and we will probably see lower prices develop next week with a possible retest of the monthly lows.
Price sells off aggressively from rejection candle
As expected this setup produced some good results, I mean it was pretty much that 10/10 setup where all the boxes where ticked in our favor. This is the kind of setup you practice patience for. The over all market pressure was down, the signal candle closed lower than its open and demonstrated rejection of a key swing level on the daily chart.
Many war room traders jumped on this opportunity and are now taking profits as price slams into a critical monthly support level where historical lows are printed. This would be a nice area to watch for strong long signals to suggest the market is bottoming out and respecting the monthly support level. Bearish breakout traps that create false breaks would be a strong indicator that the bears are exhausted and the bulls are ready to step in.
To learn more about price action trading, how to identify and take advantage of swing trades like this you can get access to our price action protocol course inside our War Room membership area.