So much for that head and shoulders reversal signal I’m watching on AUD/USD! The RBA decided to keep rates on hold for now so I’m also refraining from taking this short trade setup I had been eyeing.
To be completely honest, I already thought of hopping in at market when I saw that Australia’s retail sales and trade balance reports printed weaker than expected results. However, I decided to hold out for the actual RBA statement since the central bank’s rhetoric would likely have a stronger impact on price action.
This turned out to be a good decision since AUD/USD made a strong bounce after RBA policymakers turned out less dovish than expected. Price bounced without even testing the .7400 support zone and climbed right back above .7500, failing to complete the right shoulder of the reversal pattern.
So I guess I’ll be sitting on my hands for now but still on the lookout for any strong moves among the comdolls and potential short-term trades for the week. I’m keeping this pair on my watchlist since we’ve still got the U.S. NFP report after all and Forex Gump thinks we might be in for a good jobs reading this time.
If so, the U.S. dollar could regain ground against its forex peers on relatively stronger fundamentals, with this pop higher on AUD/USD actually giving me a chance to short at a better price. With that, I’m still keeping tabs on the .7550 minor psychological resistance for a potential sell area while stochastic is closing in on the overbought region. I’ll keep you posted through my Twitter account if I do decide to short this one!
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