AUD/USD Forex Technical Analysis – July 7, 2014 Forecast » Fx …
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A series of fundamental events last week drove the AUD/USD sharply lower, forming a potentially bearish closing price reversal top on the weekly chart. The main trend is still up on the weekly chart, but this pattern is often associated with 2 to 3 week corrections.
Weekly AUD/USD
The first objective at .9352 to .9317 was reached on Friday. If the downside momentum continues through last week’s low at .9328 then look for potential moves into .9197 and .9081. A trade through .9201 will turn the main trend to down on the weekly chart.
The main trend also turned down on the daily chart last week when .9353 was violated. The main range is .9229 to .9504. The retracement zone formed by this range is .9366 to .9334. The AUD/USD actually settled inside this zone after running out of sellers at .9328.
Daily AUD/USD
A short-term range has formed between .9504 and .9328. Because of short-term oversold conditions, the market may be setting up for a near-term retracement back to .9416 to .9437. Since the main trend is down, sellers are likely to come in on a test of this zone.
Besides the retracement zone at .9366 to .9334, an uptrending Gann angle at .9349 is a potential support level. If the downtrending angle at .9344 is taken out with conviction then look for more short-covering and a potential acceleration back to the short-term retracement zone at .9416 to .9437.
Traders need to watch the price action and order flow at .9366 and .9334. Taking out .9366 with conviction will indicate short-covering and possibly new buying. A sustained move under .9334 will indicate renewed selling pressure.
The fundamentals support a lower market, however, the speed of the decline may have created oversold conditions. In addition, the first move down may have been triggered by profit-taking and sell-stops. Traders may want to take the market back to .9416 to .9437 to give new short-sellers the opportunity to enter the market at more favorable prices rather than selling “in the hole”.
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AUD/USD Forex Technical Analysis – July 7, 2014 Forecast » Fx …
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