The Australian dollar continued its bearish slide after gapping down below .8750, which was the key pivot level for the month of October. The plummet could test the .8640 area and further downside could invalidate the double-bottom pattern I identified back on October 21st.
Bearish momentum persisted in July and accelerated on September 9th once the death cross pattern formed. The month of October provided a major consolidation period that could see further weakness if we continue to see another major U.S. dollar rally. In my last post, I targeted a rebound towards .8800 with further upside at .9032. Current resistance will come from the 50-day SMA which is trading at .8938.
The daily chart for AUD/USD displays the path for further downside pressure could target .8450 if the .8640 area is taken out.
The trade: Sell AUD/USD at .8690 with a stop loss at .8750 and a take profit at .8460. The Risk/Reward Ratio is almost 1:3
Edward J. Moya
WorldWideMarkets Online Trading