Aussie Dollar – A Correction in Progress
AUD Pairs are undergoing a correction for the past few days. Boosted by FOMC on the past Friday, AUD/USD broke the down trendline that was in place since April, on furious volume, which is often a good indication of strength in critical areas. Reaching higher ground, the volumes showed some supply – first a churn (narrow range bar with high volume) and an upthrust (bar to trigger more buying and short stop-losses). After such a strong movement, a correction is the market taking a breath, and it can provide more trading opportunities. This correction has given yet no signs of stopping, and I expect a resistance to be found near the break-out’s bar, where many large traders went in on the market, which is where I’ll be looking for a price reversal.
This pairs looks more interesting than AUD/USD to trade on the short-term. Last week there was a shake-out of the 78.43 support, which likely triggered many stop-losses and sell-stops, that provided liquidity for institutional traders to buy it, and reverse the prices. The buying is there, but are there still many sellers at these prices? To know that, we have to pay attention to the volumes and price ranges – narrow ranged bars or low volume ones would show that the reaction is going to stop, and that we’ll see higher prices.