Sell AUD/USD on Risk/Reward

The AUD/USD is at a crucial juncture – with moves over the next twenty for hours likely to set the short term direction for the currency. Overnight, the Aussie failed again above 1.08,

 suggesting that the upside is now limited, and pushing the pair below a number of resistance levels. Traders should consider a SELL trade on AUD/USD.

The chart from the Tracker platform illustrates that the currency is sitting on the medium term trend line (in blue):

A breach of this support, combined with the fact that the AUD is now below recent highs (resistance) creates a very tradeable set up.

A move below 1.0750 (just 3 pips away) would not only see a breach of the trend line, but indicate respect of the November high at 1.0753 and the September high at 1.0764. Such a move offers a target range between 1.0500 and 1.0389. This gives a number of attractive risk reward trades:

SELL AUD/USD at 1.0753 (current market), stop loss above 1.0764, target 1.0500

SELL AUD/USD at 1.0753 (current market), stop loss above 1.0764, target 1.0389

SELL AUD/USD on a break below 1.0748, stop loss above 1.0764, target 1.0500

 

About michaelmccarthycmc

Chief Market Strategist - CMC Markets and Stockbroking Regular on ABC, BBC, Bloomberg, Channel TEN, CNBC, SBS and SKY
This entry was posted in Forex, Market, Trading and tagged , , , , . Bookmark the permalink.

2 Responses to Sell AUD/USD on Risk/Reward

  1. David Lougher says:

    Strategy is premature ,wouldn’t you wait until RBA and Greek announcements today

    • michaelmccarthycmc says:

      Thanks for your comment David. Was happy to trade the level this morning once it moved through the previous support/resistance levels specified. Think the risk from the RBA minutes today is one sided – unlikely we’ll see a hawkish statement, but the Board could be more dovish than market expects. Similarly, think a “clean” Greek solution is still weeks away, with current wrangling over a permanent “troika” presence in Greece and escrowing of bail-out funds – while the potential for disapppointment/frustration is more short term.

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