Currency Updates:
I’ve been trying to pick a bottom in the AUD/USD for some weeks now and I thought that yesterday was its best chance of launching a test of .9350. The fact that this couldn’t eventuate despite the good climate has me a bit worried that the bear trend is about to re-emerge. RBA Governor Stevens will be speaking around lunchtime today, and that looks to be the main risk on the economic calendar.
TECHNICALS: The daily chart continues to look heavily oversold (see chart) but we may simply get an extended period of sideways trading rather than a sharp retracement. The shorter-term charts were unable to confirm support at .9230 so this becomes the first level of resistance. The short-term downside target is at .9130.
CROSSES: AUD/JPY is once again back at the lower end of its recent ranges near 90.00 and there is very important technical support below 89.50. AUD/NZD has been unable to re-take 1.1500 and is now eyeing support levels at 1.1365/85. EUR/AUD has had another daily close above the previous pivot at 1.4400 and the bulls will be feeling more confident. Overall the AUD is starting to look very vulnerable again.
ORDERS & FLOWS: AUD/JPY looks to be the pair most likely to deliver fireworks and heavy stop-loss sell orders are reported at various levels starting below 89.25.
INTRADAY CONCLUSION: I’m losing confidence in the buy-dip strategy and I’d suggest a range trade between .9130/.9230 today. Keep stops fairly tight either side but with the crosses all looking a bit shaky, a sell-rally strategy on the day looks most promising.
TRADE OF THE DAY: I’m afraid that I’m not seeing many value trades at the moment but USD/JPY does seem to be trying to put in a very short-term base near 97.60. Buy intraday dips to 97.70/75 with very tight stops below 97.50 looking for move to 98.80.
