I have inserted a Daily AUDUSD chart to help illustrate my cause. Please click here to view a larger chart in a new window.
I am a believer that at some stage the AUDUSD will rally and that a break above 0.7260 will see us move to 0.7700 in a hurry. Unfortunately i do not believe the technical outlook is conducive to such a move just yet.
Why do i think this?
1. Moving averages not supporting a move higher- when playing with a medium term view in mind i tend to pay particular attention to 5 and 15 day moving averages (they are the red and green squiggly lines in the main chart window). When the green crosses back above the red, look out (potentially of course!). We also then need to take out the 50 day and 100 day MAs that come in around 0.6720 and 0.6900 respectively.
2. Channels not supporting a move higher- Unfortunately the move below 0.6330 has taken out the bottom of the channel that has been in place since mid October 08. This opens the way for a move to 0.6000. We also have a nice little downward sloping channel that needs the AUDUSD to break above 0.6550/00 to negate its current downward impact. It is also probably no coincidence that the lower line in this channel comes in around 0.6000. Spooky! But just may mean that 0.6000 is going to be our capitulation level. Maybe worth leaving some small bids down there?
3. Potential trend strength to the downside- For this i pay attention to the white ADXR line in the bottom portion of the chart window. When this line starts to accelerate skyward it can often indicate that the market is trending in a certain direction and its best not to stand in the way until this subsides.
So do i sell the AUDUSD at current levels i hear you ask? NO! I prefer to get in closer to the beginning of a move, remember, your entry level on a position is EVERYTHING!! So be patient and lets keep plenty of powder dry for when this next big move unfolds.
