AUDUSD Retracement Setup (Nov 12, 2014)

After breaking below support at the .8700 major psychological level and dipping to the .8550 mark, AUDUSD has pulled up to the area of interest and may be due to resume its drop soon.

The 38.2% Fibonacci retracement level lines up with the broken support and may hold as resistance. Stochastic is almost in the overbought area already, although there may be a bit of buying pressure left until the oscillator starts crossing down from the region. With that, a higher correction to the next Fib levels, which are below the .8800 major psychological mark could still be possible.

If the selloff resumes, AUDUSD could make its way back down to the previous lows near .8550 or perhaps create new ones. There are no major event risks for this trade for the rest of the day, as Australia already released its wage price growth report which came in line with expectations. There are no top-tier releases lined up from the US today, as risk sentiment might also be a key driver of price action.

By Kate Curtis from Trader’s Way