AUD/USD breached the major resistance line, went 50 pips beyond it, and retreated. What can we learn from this false break?
The Aussie began the week very close to the major resistance line of 0.7267. This was on thin trading, when European traders were still celebrating Easter.
In the middle of the New York session, at about 16:00 GMT, the Aussie breached this line, but did it slowly, very slowly. It took very small steps. During the Asian session, between Monday and Tuesday, it peaked at 0.7324. This is 57 pips above the resistance line, reached on January 6th.
This wasn’t enough.
After reaching a 3 months high, and doing it with a significant margin, the Aussie retreated. In the early hours of Tuesday, it went back, down to 0.7232, below the resistance line.
It then continued to shake, around the line, ignoring it. During the next hours, it fell as low as 0.7150, and then rose to 0.7223. Where will it go next? Quite hard to tell.
What can we learn from this case?
- 50 pips break isn’t enough
- This was just a first test, and the Aussie will break the line again, this time flying high in the sky.
- Thin trading caused this break – Don’t trade at these times!
- Another explanation?
I must say that I’m confused, especially after praising the AUD/USD as the most predictable currency pair
. I’d love to hear a reasonable explanation…