AUDUSD Scalps Target Head and Shoulders Break- Bearish Sub 9236

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Talking Points

• AUDUSD breaks below key support / September opening range lows
• Head and shoulders break suggests broader losses into 8911
• Event risk on tap heading into close of week

" style="text-align:center"> AUDUSD Daily Chart

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• AUDUSD trading within confines of Andrew’s Pitchfork formation off the late July High
• Break below key support / H&S neckline at 9181-9206- bearish
• Near-term bearish invalidation at 9236- break targets objectives at into 9335 / pitchfork resistance
• Support objectives at 9080 8970/82 & 8911
• Daily RSI break sub-40 (first directional break since November)- bearish
• Momentum signature at lowest levels since Jan
• Event Risk Ahead: Australian Employment tonight and US Retail Sales & University of Michigan Confidence Surveys on Friday

" style="text-align:center"> AUDUSD 30min Chart

Notes: The Aussie broke below the Andrew’s Pitchfork bisector line as well as a key support zone and the neckline of a head and shoulders formation at 9180-9206. Objectively this move also took out the initial monthly opening range lows and shifts the bias lower heading into close of September trade. The focus remains weighted to the downside while below the confluence of the 61.8% extension off the yearly highs and the August lows at ~9236.

Bottom line: looking to sell rallies while below 9236 with only a breach above 9260 suggesting that a retest of the September opening range highs / pitchfork resistance may be on the cards before we head lower. Key near-term support rests at 9080 with a break below eyeing subsequent support targets into the longer-term head and shoulders objective.

Note that the average true range has remained rather tight here so we’ll increase the profit targets to 1/3 of the daily ATR- this puts us at approximately 17-19pips per scalp. Caution is warranted heading into event risk out of Australia this week and the US on Friday with the data releases likely to fuel added volatility in Aussie and US Dollar crosses.Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

" style="text-align:right"> *ORH: Opening Range High

" style="text-align:right"> *ORL: Opening Range Low

" style="text-align:justify"> Other Setups in Play:

• GBPJPY Pitchfork Setup- Scalps Target Sunday Gap
• Key Levels for NFPs - EURUSD USDJPY & USDOLLAR in Focus
• AUDCHF Gap Setup- 8545 Resistance Critical
• Make or Break Time for USDCHF- Rally Vulnerable Sub 9133
• AUDJPY Targets Key Resistance - Shorts Favored Sub 96.00
• USDCAD Opening Range Play- Key Support in Focus Ahead of Jobs Data
• GBPAUD Opening Range Break - Selling Rallies Sub August High
• GBPUSD Shorts at Risk Above 1.68 Heading Into BoE Inflation Data

--Written by Michael Boutros Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

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