Our strategy has triggered a new trade in AUD/USD. While we are already short from several weeks back at 1.0550 (booked profit on half at 1.0150), we have decided to build back into the position following the latest surge beyond parity. Overall, we see this market in the process of carving a major longer-term top, with any rallies viewed as formidable sell opportunities in anticipation of a bearish resumption and eventual break back below the critical October lows at 0.9385. Technically, the market looks exhausted intraday after the hourly RSI boomed towards 80 and the daily ATR (Average True Range) was well exceeded. Ideally, risks for additional upside on Tuesday are limited, and the market should start to pullback. We will look for this intraday pullback to build into something more significant, with a break back below 0.9860 to confirm and accelerate. We will only exit the short position should the market ever put in a daily close above 1.0250 (5pm New York). We also recommend that the position be un-leveraged. Our risk on this specific trade is less than 2% of total equity.
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