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AUDUSD: Volatility above 72c could be a bullish warning

The failire to break below 72c does raise a warnign flag for the bears but, without domestic data to help with direction, AUD traders will look at Euro and US news to dictate the weekly close

After seeing AUDUSD test 0.744 and subsequently roll over as China devalued their currency on two consecutive days, I really thought a break of 72c was inevitable. However within hours of coming within 15 pips of testing this important barrier the Aussie rallied 172 pips and appeared set to break 74c. The fact we have seen such two volatile days at the end of a trend does raise the potential for an erratic sideways correction or a bounce higher. 

AUD likely to remain capped below 0.744 unless GDP and bailout vote say otherwise
With no domestic data today it will likely be Euro and US data which dictates the direction for the Aussie (assuming no further China intervention....). With 0.744 providing decent resistance I doubt we'll climb above that this session unless we see soft US data combined with strong Euro GDP and a Greek bailout vote. 

A break below 0.73217 may provide intraday bearish setups but, until then, bullish setups in the 0.73217-0.74 range are preferred. 

72c is an important level for AUDUSD to break because it is the 61.8% retracement of 2011 all-time highs from the 2001 lows. Whilst I expect to eventually break beneath this barrier it is highly unlikely to happen this week. Next week however both the FOMC and RBA minutes so certainly potential here to make or break a move. 

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