Upcoming Fundamental Risk Factor for AUD: China’s Manufacturing PMI (9:30 PM EST, 2/21/2012)
EUR/AUD:
The 4H EUR/AUD chart shows a market that is trading sideways finding support at 1.2128, then a failure to break that low holding at 1.2150. The resistance is at 1.2420, with resistance pivots just above 1.2450 as well. This is a possible double bottom attempt if 1.2450 is broken (though confirmation may be needed to rule out a completed ABC correction). First though, 1.2420-1.2450 should be seen as resistance in a range-bound market, with bearish bias because the preceding trend has been bearish.
As we observe the “range” in EUR/AUD, we see that a central pivot exists in the 1.2270-1.2290 area. If the market can hold above this area, a bottoming process is still the preferred outlook, to be followed by at least a short-term corrective rally. Otherwise we remain in range-bound market with bearish bias to attack 1.2150-1.2130 area again.
The daily chart shows that IF a bottom is to be created, the maximum target at the moment should be in the 1.2940-1.2970 area, a previous support pivot, up to 50% retracement of the 1.3807-1.2131 swing. This correction would reflect a reversion back to the mean, since it had been oversold according to the RSI dipping below 30, and price action tagging the lower bollinger band (3 standard deviations from the 200 SMA). A more aggressive target could be 1.3167 (61.8% retracement, near the 200-day SMA).
It should also be noted that as the RSI in the daily chart nears 60, a bearish market should find resistance. Thus, we should wait for a throwback to see if it can be held above the 1.2270-1.2290 area. Also inability of the RSI to fall back below 40 suggests further consolidation that could take a bullish tone.
This analysis is of a snapshot of the market and the anticipation based on the current conditions. Things may change, and adjustments are often needed especially when preparing for a trade. To follow up and explore trading plans and risk management techniques as well as fundamental bias and event risks, don’t miss IBTrade’s daily Market Intelligence Briefings live at 8:00AM EST throughout the week. To gain free access to these sessions, register at here at IBTrade. You will receive and email with the link and password before each session once you have registered.
Fan Yang CMT is a forex trader, analyst, educator for IBTrade; and main contributor for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.0
