AUDUSD has been trading inside a rising channel on its 1-hour forex time frame for the past month, but it looks like a breakdown is happening. The pair is currently hovering around the channel bottom near the .9250 to .9300 psychological levels, with a downside break likely to indicate that more losses are in the cards.
Note that stochastic is already in the oversold region and is starting to move up, indicating a potential return in buying pressure. However, the recent selloff has been so sharp that bears might still have enough energy to push the pair lower.
A bounce from the current levels could take AUDUSD back to the channel resistance near the .9400 handle or at least until the middle of the channel at .9350. On the other hand, a downside break could push AUDUSD down to the .9200 support zone or lower.
Shorting on a break of .9250 with a stop above .9300 and a target of .9100 could yield a high return on risk for a short-term trade. Adjusting the stop to entry once price tests the .9200 support zone could be a good way to minimize exposure.
By Kate Curtis from Trader’s Way