Aussie Dollar Set-up to Tumble; Reversal Top Could Form

The U.S. Dollar strengthened this morningafter touching a five-month low against the Euro. The subsequent break in theEUR USD has put this pair in a position to form a bearish closing price reversaltop.

The U.S. Dollar strengthened this morningafter touching a five-month low against the Euro. The subsequent break in theEUR USD has put this pair in a position to form a bearish closing price reversaltop.

The AUD USD is also showing signs oftopping and is in a position to post a daily closing price reversal top. Thesell-off in the U.S.equity markets is helping to lead the charge lower.

Technically, the Aussie Dollar is tradinginside a small range of .9462 to .9733. This makes .9598 to .9566 a retracementzone target. This is really nothing compared to the bigger picture. The longerrally from .8770 to .9733 makes .9251 a potential downside target should aclean closing price reversal top develop. An uptrending Gann angle at .9290could slow down the pace of the expected decline.

This morning’s break in both currency pairswas most likely triggered by long position squaring caused by threebetter-than-expected U.S.economic reports. This morning’s 2Q GDP, Weekly Initial Claims, and Chicago PMIall came out better than their estimates, encouraging long traders to adjusttheir positions.

Many traders had been buying the Euro andthe Aussie at will in expectation of a new round of quantitative easing by theU.S. Federal Reserve. Based on this morning’s data, the Fed may not have toprint money as aggressively as previously thought.

U.S.stocks also fell as traders made month-end adjustments. Even with today’ssell-off stocks will post one of the best Septembers on record.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

Disclainer: