AUDUSD—the last hurrah?

This has been an interesting ride this week. Euro bulls are fierce but they have nothing on the Aussie fans. The pair drops, mucks about, and goes back up again. Despite that, there are signs of weakness and eventually this pair should drop a good bit more. Yesterday may have been the last hurrah before it does.

My short yesterday was taken out at +5 pips. I then watched as it climbed to .8921 and shorted again at .8909 with a very tight stop. I was thinking it might make it back to the broken, daily uptrend line from August, but no. Obviously, all is well this morning and it has touched a low of .8787. Alas, it is now starting to rally. Grr. This is tough support but I don't think it's going to hold. Notice the bearish divergence with RSI on the hourly chart (lines are drawn in blue). Depending on how today turns out, we could end up with an evening star formation on the daily chart.

Support:

.8700/22/35 (round number, broken uptrend line from 2/5 low and Dec. low)
.8614 (last swing low--three hour chart)
.8592 (uptrend line drawn from May)
.8578 (Feb low)
.8569 (Oct. low)

Resistance

.8798 (Tuesday's high and .618 retracement of the last down move)
.8916/21/30 (8921 was yesterday's high)
.8978 (uptrend line from August)
.9000/48
.9093
.9330
.9406

Here's the 3-hour chart:



© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.