Aussie is at a significant point with its drop in the past hour to .9911. There was a recent hammer low of .9926 on the hourly chart so penetration below that is ominous if it continues and closes below there. The short term uptrend line from the 11 January .9804 low is at .9916—another point it shouldn't drop below in order for the bulls to remain confident (or actually to have any hope at all).
One can make a case for a bear flag on the three-hour chart with the break coming at .9916 for a price target of .9463. My only concern with the flag is that the length of it is longer than the flagpole (61 candles versus 52) which is not normally what happens—it's usually about 1/2 to 2/3 the length for the best results. RSI has broken below its short-term trend line. If price follows, that's bearish.
However, it's common in spot Forex for prices to dip below or above a point and then reverse (a fake-out). So this may be what's happening here. If it can break and close above its daily 20 SMA (currently 1.0013) there'd be more reason for optimism. As it is, I'm leaning short.
I'll post a chart later.
© 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.