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AUD/USD Stalking Retracement Setup
- Daily and 4H: The AUD/USD has so far followed one of the scenarios we discussed on Friday. (Refer to Weekly Technical Update 11.20.2009). The market didn’t have get to the 78.6%, but instead completed the first retracement wave 0.9050.
- The market has now reached our projected 0.9250 area and is having trouble rally past this previous resistance area.
- An aggressive approach would be to go in to the 1H timeframe and consider a short-term bearish outlook to test 0.8900.
- However, in going with the established trend, a more conservative approach is to wait for a possible 2-wave correction to bottom around 0.8900. The level now, 0.9250 may be a reversal point as it is at the 127% expanded retracement level. If the market supports the pair above 0.8900 (does not have to reach 0.8900, but also could “clear out” this level.)
- If we see the market rally from 0.8900, we have a target at 0.9400. We will continue stalking the pair here as there could be another scenario – break above 0.9400. If that happens, we will reassess and be heavily bullish because bearish interest would not be able to keep the pair consolidating.
- On the otherhand, if the decline breaks 0.8900, we also have to start considering the longer-term bearish scenario.
Fan Yang
Currency Analyst,
Commodity Trading Advisor