Aussie is drifting down within the downward sloping rectangle. The low so far is 1.0480 although it bounced a bit from there to 1.0580. On the hourly chart, the price action looks somewhat sluggish. The low of 1.0480 was below the .382 retracement of the move from .9706 to 1.1012. However, as I blogged last week, there is support in this area. The retracement of .382 of the move from .9537 to 1.1012 is 1.0439. The C leg equals the A leg of the ABC correction at 1.0414. The weekly S1 pivot calculation was 1.0444. The price objective from the triangle last week on the hourly chart was 1.0443.
The 50% retracement of 9706/11012 is around 1.0353—that is a good possibility if prices sink below the 1.0480 low. On the hourly chart, that low resulted in a hammer. The lower boundary of the rectangle is currently at 1.0293.
From a bullish perspective, this entire price action could be a bull flag on the daily chart. If so, price can still sink to the bottom of the flag (the downward sloping rectangle) at 1.0293 before rallying. There is still a long-term uptrend line in play from last June with a second touch in March. However, the market is clearly readjusting.
Here is the daily chart:
© Dianne Fecteau, 2011. 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.