AUDUSD has been trading inside a rising channel on its 1-hour forex time frame for the past month, but it looks like a forex reversal signal is materializing. The pair is currently hovering around the channel bottom near the .9250 to .9300 psychological levels, with a downside break likely to indicate that more losses are in the cards.
Note that stochastic is already in the oversold region and is starting to move up, indicating a potential return in buying pressure. However, the recent selloff has been so sharp that bears might still have enough energy to push the pair lower and trigger an uptrend forex reversal.
Forex Reversal Signal
A bounce from the current levels could take AUDUSD back to the channel resistance near the .9400 handle or at least until the middle of the channel at .9350. On the other hand, a downside break and forex reversal could push AUDUSD down to the .9200 support zone or lower.
Shorting on a break of .9250 with a stop above .9300 and a target of .9100 could yield a high return on risk for a short-term trade. Adjusting the stop to entry once price tests the .9200 support zone could be a good way to minimize exposure.
The Australian jobs release is due this week and is expected to show a rebound in hiring, which might be enough to prevent a forex reversal for AUDUSD. Weaker than expected figures could lead to more losses for the pair though, especially as risk sentiment is in favor of the US dollar for now.
There are no major reports due from the US economy for today, leaving risk appetite as the main driver of forex price action. Bear in mind that geopolitical tensions are on the rise once more, as US President Obama is set to announce an action plan on ISIS this week while Russia has imposed additional sanctions on the euro zone.
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