Tough luck on my other trade lately, so I’m hoping to find another setup that could work out a little bit better. Here’s what I’m seeing on AUD/USD.
Long AUD/USD Idea
This pair had been cruising inside an ascending channel for the past few years (yes, years!) so this downside break suggests that the tide could turn big time.
But I’m not too confident about catching breakout entries, so I’ll hold out for a pullback on this one to get in at a better price. For now, I’m eyeing the .7700 major psychological level as the oversold stochastic suggests that a bounce may be due.
If I’m able to jump in, I’ll initially aim for the recent lows at .7500 and set my stop back inside the channel. It looks like the FOMC statement could be enough to trigger a pullback to the broken channel support, so I’m keeping my eyes peeled for a chance to short.
I’m bullish on the dollar mostly because of the Fed’s tightening bias, even though there was some change in rhetoric this month. U.S data has been more or less upbeat, so I’m thinking that the market expectations for future hikes could stay in play.
As for the Aussie, risk-off flows could keep weighing on the higher-yielding commodity currency if geopolitical risks remain in play. For now, I’ll keep a lookout for the upcoming trade balance and RBA monetary policy statement release to see if policy biases remain intact.
What do you guys think?
See also: Q4 2017 Trading Performance Review
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