Trade Update: 2010-08-02 02:44

Things are looking bearish for the Aussie right now so I changed my mind about this trade idea. Besides, AUDUSD already rallied far away from the entry area I'm looking at. The pair already made a new high at the start of this week so this idea's pretty much invalidated.

Maybe it's about time to switch sides and look for a short opportunity. I heard the RBA is expected to pause with their rate hikes this month so that could serve as a catalyst for an Aussie drop!

Trade Idea: 2010-07-26 23:02

Looking at the one hour chart of AUDUSD, we can see that the pair has been on a recent short term uptrend. With risk tolerance being the main market driver right now, I'm looking to find ways to get into this uptrend. I decided to pop on the Fibonacci retracement tool to help me find a spot to enter.

Using the July 22 lows and this week's highs, I think there's potential to buy at any of the major Fib levels. I may just put orders in at all the levels and scale into this trade. I'm keeping an eye out for that 61.8 level, as it lines up with former resistance at .8850. Could this serve as support now?

In terms of sentiment, I think risk appetite just made a nice comeback in the markets late last week. The relatively upbeat results of the UK GDP and EU stress tests gave traders enough courage to buy up higher-yielding currencies then, and it looks like this momentum could carry on for a few more days.

The economic calendar shows that a bunch of top-tier reports are in store, such as the US consumer confidence report, Australian inflation data, and RBNZ rate statement. Depending on the outcome of these reports, the current AUDUSD rally could either continue or reverse. Of course, stronger than expected results could spur risk appetite and push the Aussie much higher

So there ya have it. No entries yet though, as I'm going to wait and see how price reacts to those Fib levels. Make sure to check out my post tomorrow for any updates on what I plan to do.