AUDUSD Goes Adrift and New EURUSD Trade
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The NZDUSD is working out to the downside but a drop below the early month low at 8068 is still needed in order to increase confidence that a top is in place. The AUDUSD on the other hand continues to do nothing. Price has traded at the same level since 8/2. The topping signs are obvious and include repeated failures of 10600 and trendline resistance, key reversals (240 minute bars…in red) and now drastic divergence with RSI (well below 70 and indicative of an exhausted market). The most important indication that a top is near is my own psychology. In my own experience, sleepless nights and simply wanting to give up on the trade idea tend to occur just before the expected move. Understanding your own psychology is paramount in trading. That said, I am flat now after being taken out on the spike above 10605. A drop below yesterday’s low (10530) or an obvious blowoff into the trendline just below 10700 (10680/90) offers the next opportunity.
The EURUSD has actually been a joy to trade on a short term basis recently. It was mentioned in last night’s technical that “daily RSI is rolling over at levels consistent with bearish resumption. Look lower towards at least 12290. Notice that the 4th wave label is moved out in time to allow for a more complex correction, probably as a triangle or flat, from 12041.” Price has bounced from 12290 and resistance for today / tonight is now 12330. I like shorts into 12330 with a stop at 12390 with 12240 and 12140 targets. Pattern wise, a triangle or flat may be underway from 12040.
AUDUSD – 240 Minute Bars
Prepared by Jamie Saettele, CMT
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Jamie is the author of Sentiment in the Forex Market.
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