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  • AUD/USD has bolted from yesterday’s analysis leaving little left on the table for bulls seeking a discount. 
  • Instead, the playbook switches over into the hands of the bears. 

Following on from yesterday’s analysis, AUD/USD Price Analysis: Bulls target upside structure, AUD/USD gave back some ground but not enough of a discount to warrant a favourable risk to reward trade setup.

If the price bolts, it is prudent to let it go and instead look through the other 28 major currency pairs, and/or some other 50 exotic crosses for alternative and higher probability trade setups.

However, staying with AUD/USD, as the price action and market structure develop, so too will a trade opportunity.

As explained, the price has moved higher which turns the page of the playbook for the next setup.

This time, there is a bearish bias. 

The following is a top-down analysis to illustrate where bears can take advantage of the price development.

Starting with the daily chart, above, we can see that the price has met a minor resistance level. 

If there is a surge in the greenback, see below, then this should be enough to start a fresh wave of selling in AUD/USD.

The following 4-hour time frame analysis can be used as a benchmark for a possible shorting AUD/USD trade-plan:

Of course, trading is supposed to be reactive, not predictive, but, “it is better to be prepared for an opportunity and not have one than to have an opportunity and not be prepared,” – Whitney M. Young Jr.

In an alternative scenario, should the US dollar bleed some more to a projected 93.50 support area in the DXY, and AUD/USD proceeds to higher structure, a similar setup should prevail.

However, this would be preferable considering there would be a slightly lower target and less upside risk.

Therefore, this would make for a higher conviction trade plan because the price would have completed a 61.8% Fibonacci retracement of the bearish impulse. 

As for the DXY, the downside is decelerating in the 4th wave of a 5-wave analysis as follows:

The support structure is expected to hold and initiate the 5th-wave to the upside which emboldens the bearish case for AUD/USD.