AUDUSD: Downtrend Resuming, .8850 Potential Imminent SupportTarget
The daily candle chart below shows price history of the Australian Dollar (AUD) versus the United States Dollar (USD) over the medium term. This pair is know by the symbol AUDUSD and is currently trading near .8917 as of publication, and lower for the second time in six trading sessions (including Sundays) where dipped back below .8900 earlier today.
Support near current levels could build for further recovery towards .9100 for the Aussie against the US Dollar. Comments by the Fed today were described as helping to reverse dollar gains as per coverage by WorldWide Markets Chief Market Strategist Joseph Trevisani.
The overall theme in place for the AUDUSD highlighted by the chart below, indicates that the bearish trend of the medium term may not yet be over, and the lows of December 18th 2013, near .8819 - could be repeated if a break below .8850 happens.
At just under 70 pips away from that price, this target could be imminent, if the bearish momentum of today (and overall - of recent months) continues.
Last time the AUDUSD pair was covered in the Ideas You Can Trade daily post, it had reached a three year low. Since then the pair recovered but is now setting up to retest lower, unless support can be regained at current prices and push the major pair higher to avert another low.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .9001 with a Limit to take profit @ .9039 and a stop-loss @ .8972 Risk/Reward Summary: Limit risk = +38 pips profit / (-29) Stop-loss risk = Gain to Loss ratio = 1.31
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8839 with a Limit to take profit @ .8799 and a stop-loss @ .8861 Risk/Reward Summary: Limit risk = +40 pips profit / (-22) Stop-loss risk = Gain to Loss Ratio = 1.81
Medium Term Chart with Daily Candles: