Pair: AUD/USD
Time frame: 4-hour
Long or Short: Short
Chart:
Trade Rationale:
From a technical perspective, it looks like the AUD/USD rally is overdone as it reached the top of the 4-hour channel around 1.0400 resistance. Stochastic is already deep in the overbought area.
From a fundamental point of view, I think dollar buying could resume since the Fed policymakers don’t seem to be too eager to implement further quantitative easing just yet. Because of that, the Greenback could retain its safe-haven status while global economic threats (euro zone debt crisis, slowdown in economic activity) are still present.
Trade details:
Short AUD/USD at 1.0400, stop loss at 1.0450, profit target at 1.0200.
Reward to risk:
Potential 4:1 trade.