The AUD USD sold off overnight, confirminglast Friday’s closing price reversal top at 1.0002. The break was short-livedhowever as a bearish U.S. Industrial report fueled speculation about the Fed’squantitative easing program, reversing the intra-day trend.
The AUD USD sold off overnight, confirminglast Friday’s closing price reversal top at 1.0002. The break was short-livedhowever as a bearish U.S. Industrial report fueled speculation about the Fed’squantitative easing program, reversing the intra-day trend.
After reaching parity late last week, theAussie sold off, partially because of the psychological barrier at 1.00 and thelack of clarity from Fed Chairman Ben Bernanke. Technically, the market was expected to trade down to .9732 to .9668,but buyers came in before this retracement zone could be reached.
If the daily reversal top becomes solidresistance then two scenarios can develop. Either it reaches the firstretracement zone and finds support, or this zone fails and the market drops toa major retracement zone at .9386 to .9241.
Although the main trend is up, this markethas the potential to begin a serious short-term break without ever changing thetrend. In other words, it’s ripe for a correction. The problem is it’s going toneed a break in the U.S.equity markets or bad news from Chinato trigger the correction.
Aggressive traders can look at theshort-side following a retracement of the first leg down. This trader will beagainst the main trend, but it could pay off in a big way if the majorretracement zone is reached. The exit is over the top at 1.0002.
