Online Currency Trading Analysis Shows Potential AUD/USD Breakdown – May 20, 2014

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Online Currency Trading Analysis Shows Potential AUD/USD Breakdown - May 20, 2014

Online Currency Trading Analysis Shows Potential AUD/USD Breakdown - May 20, 2014

AUD/USD has been on a steady uptrend, as seen on the 4-hour time frame online currency trading chart, but it appears that the rally is slowing down. The pair has formed lower highs from April to May, indicating that sellers are becoming more aggressive.

The pair is still finding support at the .9300 major psychological level and the rising trend line. However, stochastic is indicating selling pressure and a breakdown might still be possible. After all, the recently announced budget cuts and downbeat RBA minutes might be a reason for the Aussie to sell off.

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AUD Online Currency Trading Analysis

Shorting below .9300 with a stop above the .9400 mark and a target of new lows near .9000 could yield a 3:1 return on risk based on this online currency trading analysis.

Bear in mind that the Aussie is under heavy selling pressure now that the RBA has announced its neutral monetary policy stance. The central bank is not looking to hike interest rates anytime soon for fear of triggering unwanted appreciation for the Australian dollar, which might hurt the country’s commodity exports. It doesn’t help that the Chinese economy is expected to keep slowing down in the next few quarters, which means that external demand will probably remain weak.

Risk sentiment is also in favor of a downside break as the recently declared martial law in Thailand means a risk off online currency trading environment. This could lead to more gains for the safe-haven U.S. dollar versus the higher-yielding Australian dollar.

Moreover, credit rating agency S&P has already warned that the country’s AAA rating might be put under review if there are no measures taken to trim the budget deficit. Protests have already filled the streets as healthcare, pension, welfare, and higher education spending could be trimmed.

To contact the reporter of the story: Marco Roemer at marco@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.