A falling trend line can be seen connecting the highs of the price on AUD/USD’s 1-hour time frame, reflecting the ongoing downtrend for the pair. It has just bounced off the .9300 major psychological level and appears ready to test the trend line.
Resistance could hold at the 38.2% to 50% Fib area, as this lines up with the trend line and the .9400 major psychological level. Stochastic is still in the overbought area but hasn’t crossed down, suggesting that Aussie bulls have run out of buying power but that bears aren’t quite ready to push this pair back down.
Shorting at .9400 with a stop above the trend line or 61.8% Fibonacci retracement level and a target of new lows could yield a good return on risk for a short-term trade. Moving the stop to entry once the pair tests the previous lows around .9300 could protect profits.
By Kate Curtis from Trader’s Way