Thursday, October 17, 2013

Aussie enters a zone of attrition

Click on the chart to enlarge

The Australian dollar / US dollar pair has entered a zone where some careful attention needs to be applied. On the daily chart (above) price has just entered a significant activity area, where there was an amount of indecision earlier this year, in June. This coincides with the approach of a falling 200 Day Simple Moving Average (SMA), which price will have to breach if it is to continue upward..

Price is sharply on the rise this morning, which is connected with traders’ attitudes to the US debt negotiation deal that was struck yesterday by the different parties in Congress.

A turnaround here is a distinct possibility. Those who are long this pair should now tighten their stops, having enjoyed a good run up.

All others should be on the lookout for a possible period of exhaustion buying, where the laggards begin to feel that they have missed the boat and get in on feelings of regret. These exhaustion periods, if that is what this is, always end in reversal.

There is also likely to be a buildup of stop loss orders to protect those who believed this pair was likely to fall at around this level. So a short squeeze, brought on by the US Debt Ceiling deal, is also in prospect.

We will see what happens. Click on the chart above to get a better view of the situation.


  1. great article lean alot thanks for this.

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