AUDUSD traded lower after the yesterday’s FOMC meeting minutes. I think the pair has the potential for more downside. There is also a gap to close at around the 0.9240 level as shown in the daily chart below. So, I think we should look for short term sell opportunities.
There are two ways to trade AUDUSD. First, we should wait for a rally or retracement to enter a sell trade. There is a trend line on the 4 hour chart as shown below, which can provide support to the pair. There is also a down-move trend line, which can act as a resistance. So, we will enter a sell trade once the pair moves higher, makes a stop around any of the resistances (0.9350 and 0.9360) and forms a bearish candle pattern on the hourly chart along with a bearish hidden divergence on the 4 hour chart.
Alternatively, if the pair does not move higher and breaks the trend line, then we will wait for the pair to re-test the broken trend line to enter a sell trade as plotted on the 4 hour chart shown below.
Initial target should be around 0.9240 and final target could be around the 0.9200 the figure. Stop should be placed above the down-move trend line on the 4 hour chart for the first scenario, and above the broken trend line and support for the second scenario.
Reviewing yesterday’s events and trades
Yesterday, was an eventful day, as a lot of fundamental data was released for the US. At GMT 1.30 PM, US CPI figures along with retail sales numbers were released. US retail sales registered a healthy rise of 0.4% in October, and on the other hand, inflation for the US remained steady. Later, US existing home sales data was released, which came around the expectations of 5.13M. The most eventful release was FOMC meeting minutes in which the Fed highlighted the possibility of tapering in the coming months. The US dollar traded higher after the release, and our EURUSD sell trade from yesterday did the job.
Fundamental Outlook for the day
Today, US Producer Price Index (PPI) data, initial jobless claims, manufacturing PMI and Philadelphia fed manufacturing index will be released in the NY session. Any further improvement can push the US dollar higher. The ECB president, Draghi will also be speaking later in the European session, which can cause some volatility for the Euro pairs. Other than this, FOMC member Bullard’s speech is also scheduled later in the US session. This means we can again expect some volatility today.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, USDJPY, NZDUSD, EURAUD and GOLD.
Get it HERE: Vladimir’s Markets Forecast
Trade carefully friends. Happy trading!
