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AUD/USD’s Failure at Support Could Generate Scalping Opportunity

AUD/USD’s Failure at Support Could Generate Scalping Opportunity

2010-05-18 14:50:00
John Rivera, Currency Analyst
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The RBA minutes from their last policy meeting where they raised rates for a third time this year to 4.50% hinted that policy makers will look to pause their current tightening cycle. The central bank is of the view that interest rates may be “well placed for the present," as they expect the latest hike to push mortgage rates to the average level for the past decade. The dovish comments sunk the AUD/USD which has since found its footing after failing to hold below solid support levels, which could lead to a period of consolidation and a scalping opportunity.

Key Technical Levels

5-18-10SCALP-01

The AUD/USD has seen its current bearish decline slowed by support at 0.8756- 38.2% Fibo of 0.7699-0.9407. The psychological level of 0.8700 also looms below and has proven to be a formidable level. We are seeing a short-term wedge develop which is providing target levels for scalpers to enter and exit positions.

5-18-10SCALP-02-R2

Quantitative Metrics

Unlike other pairs which have started to see their daily volatility quiet following the extreme levels generated by the European debt crisis, the AUD/USD continues to see its ATR remain elevated. However, at 128 pips it remains near the bottom of the most traded pairs, but is accounting for 1.46% of the spot price. Additionally, the Bollinger band width has grown to 764 pips without any signs that variation is ending over the near-term which raises a red flag for high frequency traders.

5-18-10SCALP-04

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