AUD/USD Breaks 200-day SMA and Looks Toppy
The dramatic drop in the aussie last night when the CPI was released at 9:30pm EST pushed prices lower in what I deemed a “too far-too fast” manner. In other words, regardless of the negativity of the move, it appears some moves are simply unsustainable. I realize this is a very subjective determination so I need to rely on my charts to justify and measure what the move means in terms of support and resistance. However, I think it is very important to understand that there is a vast difference between a negative market sentiment and a bearish trend; I believe the culmination of a negative market sentiment creates a bearish trend.
The 15, 30, and 60-minute time frames were all moving in a sideways neutral market cycle before the sharp sell-off. The move lower did not immediately shift any of those short term time frames into a confirmed mark down cycle until after the move, and I feel the best course of action was to wait for profit taking and buying momentum to drive prices back up to correct the nearly 100 pip sell-off.
Immediately upon the first two negative candles on the 15-minute time frame, I noticed that my longer-term 240-minute – which was in an uptrend – was triggering a swing buy off the 34EMA Wave. The pullback was well into the area between the 34 period EMA (Exponential Moving Average) high and low and nearing the support between the minor psychological level at 0.8920 and 0.8900. Around this time, I went ahead and “tweeted” my thoughts on buying the 240-minute pullback on the AUD/USD.
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
The market rallied to 0.8976 and where prices were met with selling pressure just four pips in front of the minor psychological level at 0.8980. The exhaustion reached the 34 period EMA low on the 60-minute time frame which had now transitioned into a mark down (downtrending) market cycle and was triggering a short-sell off the 34EMA Wave.
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
In my experience, often times a great entry is fouled by a lousy set of exits. It is my belief that markets simply move as far as they’re going to move (until they are met will either buying support or selling momentum) is about as simple as you can view price movement; being long the 240-minute means that upside resistance can potentially can be a reversal point.
Overall, there seemed to be an odd mix of factors that set up the move lower. I believe the negative CPI was the catalyst but the toppy price action of the daily time frame could not be ignored. However, contrasting this ceiling was the fact the AUD/USD has managed to break up higher through its 200 period SMA (Simple Moving Average).
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
Today’s negativity which begun with the CPI triggered sell-off, has pushed the AUD/USD lower back through the support of the daily 200 period SMA and effectively justified the intraday bearishness seen late last night. A bounce to 0.8951 on the 60-minute chart would trigger another intraday swing short.
*Trading in the off exchange retail foreign currency market is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose. Read the full risk disclaimer and privacy policy on trading at www.ibfx.com.
Similar Posts:
- Short and Longer Term Intraday USD/CHF Swing Entries
- Picking Your Spot: USD/CHF Swing Short Set Up
- Is the intraday USD/JPY nearing an exhaustion area?
- EUR/JPY Pulls Back to Swing Entry After Non-Farm Payroll Release
- Support Targets for the USD/CAD Intraday Downtrend
