Gains from yesterday are reversed today
As the open to the US stock market looms, the AUDUSD is extending the trading range for the week, breaking below the lows from Monday and Tuesday's trading at the 0.6744-47 area. We currently traded 0.6738. Those lows were also home to swing lows going back to August 5 and August 8. On August 7 (the day the RBNZ cut rates by 50 bps), the pair raced to the lowest low since March 2009, but recovered and created a new higher floor. That floor is now broken.
When a floor is broken, it becomes a ceiling. Traders will now look for the 0.67472 to attract sellers. Where do we go? As long as the ceiling holds (no momentum above), the path of least resistance is to the downside with:
- 0.6732 the 61.8% retracement
- 0.67215 a swing low frow August 7
- 0.67000 the natural support level, and
- 0.66767, the lowest low since March 2009 as targets.