Currency Updates:
We are finally seeing a bit of orderly calm return to the AUD although there were a few moments of volatility mainly caused by events in regional stock markets. Reports that a small Chinese bank had failed sent their stock market tumbling and causing the AUD/USD to fall swiftly but these losses were soon reclaimed.
I’m expecting a fairly quiet day of range trading with most of the focus remaining on the crosses.
TECHNICALS: The big level to watch on the topside is previous lows at 0.9325 (see chart) and the bulls will need to break back above there in order to generate fresh momentum. Support levels start at yesterday’s lows near .9200 and of course at Monday’s .9145 level.
CROSSES: AUD/NZD is in a solid downtrend still and after bouncing sharply from 1.1750, I’m expecting resistance to be very solid near 1.2000 (see chart). If you’re very bearish on the AUD, this could be a good trade opportunity.
AUD/JPY is trying to base at an important technical support level (see chart) near 89.25/50.
EUR/AUD (see chart) is trying to form a cap near weekly resistance at 1.4400.
ORDERS & FLOWS: Heavy trailing stop-loss orders from hedge funds are reported through .9340.
INTRADAY CONCLUSION: I’m still bullish but remain fairly cautious. If resistance at .9325 holds then I will be quick to reduce my long position and look to re-buy on deeper dips. AUD/JPY dips should be well supported but AUD/NZD rallies will meet with plenty of selling interest. I’m guessing .9225/.9325 on the day.
TRADE OF THE DAY: Even though I think the AUD is oversold, I still think that it will struggle against the NZD. Selling intraday rallies to 1.2000 with a stop above 1.2070 looking for 1.1850 seems like a sensible risk-reward play.
Good luck out there.
