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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar Sellers Struggle with Follow-Through Below 0.72 Figure vs. US Dollar
- Opting to Wait for Better Risk/Reward, Passage of Event Risk Before Re-Entering Short
The Australian Dollar is struggling to make headway below the 0.72 against its US namesake having declined as expected after putting in a bearish Evening Star candlestick pattern. We entered short AUD/USD at 0.7290 and subsequently booked profit on half of the position. The remainder of the trade was stopped out at the breakeven level.
Near-term support remainsat 0.7199, the 14.6% Fibonacci expansion. A break below this barrier on a daily closing basisclears the way for a test of the 0.7056-86 area, marked by a rising trend line and the 23.6% level. Alternatively, a move above the 38.2% Fib retracement at 0.7387 opens the door for a challenge of the 50% mark at 0.7535.
Re-entering short looks unattractive from a risk/reward perspective at current levels. Furthermore, potentially disruptive event risk by way of Australian CPI figures and the FOMC policy announcement looms ahead. We will stay flat for now.
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