The Aussie was lower overnight after RBA Deputy Governor Debelle made comments about how lower capital inflows will weigh on the their currency. The move was limited as trade flows for most of Wall Street have been fairly light. If equities finally do have a correction or if the yield on the 10-year bond holds above 2.50%, the U.S. dollar may finally have a major rally against the commodity currencies.
Price action on the AUDUSD daily chart shows that price has just broken the heavily tested bullish trend line that has been in place since the end of January. With price tentatively piercing the 50-day SMA, traders will look to see if we do see price close below this indicator which currently resides around .9266. Key support will come from the psychological .9200 level and 200-day SMA which is trading at .9170. If downward momentum accelerates this evening, major support will come from a potential bullish ABCD pattern at .9076, which is also fairly close to the 100-day SMA at .9094 level.
The Trade: Sell AUDUSD at .9255, take profit .9120, and a stop loss at .9300. The risk/reward ratio is 1:3
Edward J. Moya
WorldWideMarkets Online Trading