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Today’s Trading Edge: AUD/USD falls to 6-year low after RBA keeps rates on hold

Posted by Edward Moya on Jul 7, 2015 10:16:00 AM

WWM AUDUSD JULY 7 2015

AUD/USD came under fresh selling pressure after the RBA kept rates on hold and central bank Governor Glenn Stevens said a weaker currency is still needed.  The Australian currency fell over 1.2% toward the .7400 handle.  

Last week, price action made an important daily close below the key .7532- .7940 range.  This key break allows room another major slide.  With iron ore prices remaining vulnerable and weakness persisting in non-mining activity, we could see Aussie dollar drop towards the psychological .70 handle. 

Currently the AUD/USD daily chart is displaying a potential bullish butterfly pattern at the .7358 level.  Point D is targeted with the 127.2% Fibonacci expansion level of the X to A leg and the 200.0% Fibonacci expansion level of the B to C rally.  If price does respect this potential fresh low, a bullish bounce could target the .7500 area before the longer-term bearish trend returns. 

If we do not see a bullish bounce and the pattern is quickly invalidated, we could see price immediately taret the .7150 area.   

The trade: Sell AUD/USD at .7520, with a stop loss at .7620 and take profit at .7320.  The risk/reward ratio is 1:3

Edward J. Moya

Senior Market Strategist

WorldWideMarkets Online Trading

Topics: RBA, AUDUSD, Reserve Bank of Australia, $AUS, aud, Australian Dollar, Australia Economy

 

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