Risk is ‘off’ and we are positioned with the AUDUSD shorts from 10240. AUD losses are outpacing EUR losses, which should happen in a true risk off environment. In fact, the EURAUD is going to carve out a bullish key reversal today. There will be bounces along the way and I’ll do my best to identify the short term ‘washouts’ that lead to decent sized bounces, defining a ‘decent sized bounce’ as 25% of the 20 day range (which is 91 pips right now). 10100, defined by the 100% extension of the decline from the top and corrective channel support, may provide support for a bounce into 10150 but the post AUD data recovery high at 10200 should be safe. 9965 is the next downside level of interest and one that may produce a washout and aforementioned bounce.
Over the next few days, watch 10 or 15 minute RSI. Expect resistance as the indicator reaches 60-70.
