AUDUSD has been on a strong forex market downtrend since the start of the month but may be due for a quick correction after gapping down early this trading week. Price dipped below the .9000 major psychological level and could pull up to the .9100 mark before heading further south.
MACD is reflecting a pickup in buying momentum, which might be enough to push AUDUSD to the 38.2% Fibonacci retracement level from the latest swing high and low. This is close to the .9100 area and the 100 simple moving average, which could hold as dynamic forex market resistance for the pair.
A higher retracement could last until the .9150 minor psychological resistance, which is close to the 200 simple moving average. Stochastic is climbing to the overbought zone, indicating that there’s enough buying pressure left for a forex market correction.
Forex Market Outlook
A return of sellers to the forex market could push AUDUSD back to its recent lows around .8990 or lower to the .8900 major psychological support zone. Event risks for this setup are the FOMC statement and the RBA minutes release.
Shorting at .9100 with a stop above .9150 and a target of .8900 could yield a 4:1 return on risk, with the use of a trailing stop to protect profits and minimize forex market exposure. A hawkish FOMC statement might lead to a strong AUDUSD selloff during the middle of the week, as the Australian dollar has recently been weighed down by bleak Australian data and downbeat Chinese reports.
Meanwhile, US retail sales have recently come in stronger than expected, although the recent NFP report has been below consensus. The recent RBA minutes indicated that policymakers are getting worried about the high house prices in Australia and aren’t looking to cut interest rates anytime soon, which still provides a bit of forex market support for AUDUSD.
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