The pick of the day is AUD/USD. First, let’s take a look at the daily dance floor while it’s naked. Meaning I’m not going to add any items of our forex beauty kit on it- yet. See if you can identify what I’m talking about. The pair completed a head-and-shoulder pattern and continued down until it hit a support level now is trying hard to dance to the north but somehow can’t. Bonus points to you if you were able to visualize what I said. Now let’s throw in items of the beauty kit on the floor.
Adding Mr. Fibonacci, we realize that this barrier keeping the pair from going up is the 38% Fibonacci level. Adding Mr. Ichimoku, we realize that general bias is bearish and that the pair is trying to break below the lower band of Mr. Ichimoku. Adding Mr. Bollinger, we realize that the pair is done scratching the upper band and now head towards the middle band. So yes, as you guessed, my general bias on Mr. Aussie Dollar is: Bearish.
Fundamentals also back up this strategy because a few hours ago China printed another decline in its HSBC flash manufacturing PMI, reflecting a deeper contraction in the industry. This could put AUD/USD back in selloff mode since a slowdown in Australia’s number one trading partner could weigh on export activity and overall growth.
Bearish targets are 0.89242 and 0.86829. Alternatively if the pair suddenly change direction and rebelliously break all the resistance levels, the bullish targets would be 0.91968 and 0.93174.
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