- EUR/USD 60-minute Swing Short
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The RBA and 60-minute AUD/USD
Even amidst the RBA’s decision to halt rate hikes for 2010 and possibly even consider tightening towards the latter part of ‘10 there was a near-term bottom put on the AUD/USD along the 0.8380 level.
The AUD/USD has been in a sharp downtrend on the daily chart with the current exhaustion level at 0.8550. If prices can rally higher once again to that level, there will be selling pressure waiting. Intraday however is a distinct shift in sentiment from what was a downtrend to range-bound price action. Keep in mind that much of it is distribution that will lead to exhaustion at nearby highs and lows rather than follow-through.
Traders looking for an aggressive shorting opportunity can look at the shallow downtrend on the 60-minute chart and short into the 0.8370 to 0.8380 area. Beware of holding this short sell through 0.8905 where sentiment could shift to a markedly bullish intraday rally.
What does the current volatility in equities mean to the forex?
The S&P500 started the day with a healthy pre-market rally and a strong open after the bell. The recent stability seen in the equities markets has not been bullish, though: instead, it is the result of prices congesting along the bottom of the range created by the sell-off on May 6. Despite that reality, sideways price action did have a calming effect on investors who feared a new low amidst the negative market sentiment driven by concerns over Europe. This morning seemed to put a renewed spring in investors’ steps – especially those who hoped the S&P500’s ceiling, at 1088.75, could be broken en route to a correction of the nine-day sell-off. Trading after 1:45 PM, however, proved otherwise.
The dramatic sell-off that occurred later in the session immediately raised eyebrows among those looking for a strong close, and fear – and the selling that comes along with it – rallied the Volatility Index (VIX). The VIX was then able to find support between 27.19 and 31.07; in a bullish move prices rallied above the 31.07 high, which is in and of itself a break through past support (now resistance).
Fear in equities will keep the U.S. Dollar strong but be aware of the double top forming on the daily chart of the dollar at 87.62 and 87.55.