LOOKING TO SELL ON RALLIES; MARKET EXPECTED TO BE WELL CAPPED AHEAD OF 2009 HIGHS
Aud/Usd: Although the market has been struggling to break down since double topping by 0.8240 on June 11, we still retain a bearish bias and look for opportunities to sell into rallies towards the 0.8240-0.8265 area. A fresh lower top is now ideally sought out below 0.8240, ahead of the next drop through 0.7825-50. Nevertheless, we do not want to be too aggressive with our entry and will look to be more conservative by incorporating some ATR (Average True Range), and Fibonacci analysis to isolate an ideal sell entry point for Friday. The ATR for the pair currently stands at 170 pips, and as such, based on the current daily low by 0.7980, would project a potential high today by 0.8150. Additionally, the 78.6% fib retrace off of the latest 0.8240-0.7850 also comes in directly by 0.8155 to provide an ideal technical confluence for our trade. Any gains beyond 0.8150 are therefore expected to be very well capped. Strategy: SELL @0.8145 FOR AN OPEN OBJECTIVE, STOP @0.8285. Recommendation to be removed if not triggered by NY close (4pm ET) on Friday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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