Monday October 18, 2010 - 21:06:23 GMT
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Forex Hound - www.forexhound.com
Aussie Dollar Recover Sell-off, Moves Higher for Session
The AUD USD sold off overnight, confirming
last Fridayâ€™s closing price reversal top at 1.0002. The break was short-lived
however as a bearish U.S. Industrial report fueled speculation about the Fedâ€™s
quantitative easing program, reversing the intra-day trend.
After reaching parity late last week, the
Aussie sold off, partially because of the psychological barrier at 1.00 and the
lack of clarity from Fed Chairman Ben Bernanke.
Technically, the market was expected to trade down to .9732 to .9668,
but buyers came in before this retracement zone could be reached.
If the daily reversal top becomes solid
resistance then two scenarios can develop. Either it reaches the first
retracement zone and finds support, or this zone fails and the market drops to
a major retracement zone at .9386 to .9241.
Although the main trend is up, this market
has the potential to begin a serious short-term break without ever changing the
trend. In other words, itâ€™s ripe for a correction. The problem is itâ€™s going to
need a break in the U.S.
equity markets or bad news from China
to trigger the correction.
Aggressive traders can look at the
short-side following a retracement of the first leg down. This trader will be
against the main trend, but it could pay off in a big way if the major
retracement zone is reached. The exit is over the top at 1.0002.
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