Daily Observations: July 24, 2013
- Short GBPUSD at 1.5390, Stop at 1.5540, Target 1 at 1.5280, Target 2 at 1.5170, Target 3 at 1.5030
- Short AUDUSD on daily close <0.9220, Stop at 0.9350, Target 1 at 0.9145, Target 2 at 0.9045, Target 3 at 0.8960
Typical Time Frame: 1-day to 1-week
The short GBPUSD trade I initially discussed on Monday and chose to retain on Tuesday was initiated late in the US session yesterday, and I intend on remaining short through the close today. However, once my first target of 1.5280 is met, I will move up my Stop to my entry at 1.5390 to remove any risk. Upon each subsequent target being hit, I will move my Stop up to the prior target (i.e., once Target 2 is reached, the prior Target 1 will become the new Stop level).
Elsewhere, I'm watching for early signs of a US Dollar turnaround with the AUDUSD catching my attention in particular. Of note, a failed breakout yesterday of the sideways/slight downtrend since late-June has teed up a daily Bearish Key Reversal today on a close under 0.9220.
With Chinese data turning lower alongside softer Australian inflation data, chances for another rate cut by the RBA are increasing for the August meeting. Overall, the continued divergence between Australia/China and the US on the monetary policy front is, in my belief, to be a prime source of bearish fundamental pressure for the AUDUSD in 2013.
I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 06:00 EDT / 10:00 GMT, in which I delve deeper into my positions and thought processes behind my analyses.
--- Written by Christopher Vecchio, Currency Analyst
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