AUD/USD: Correction Still Rising
The aussie continues to correct higher. It temporarily broke above 0.9300 and went as high as 0.9345 before falling back down again. A stronger break up to 0.9400 remained elusive however – although it will probably reach there eventually . It now appears to be moving within a gently rising channel, which it has just fallen to the base of, and will probably rebound and head back up again, to a target zone between 0.9380-0.9400. However, a trend-line at about that level – depending on where exactly you draw it - impedes further progress and would need to be breached for follow-through. As far as downside goes, a break out of the current gently rising channel - below 0.9245 - would set-up a break back down to the 0.9140 lows.
The EUR/USD pair has formed a temporary bottom after poor growth data slowed the move down yesterday. Overnight the pair drifted higher, breaking up through a trend-line and this will probably lead to a rally higher to a target at 1.3085. Confirmation of such a move would be enhanced by a strong bullish candlestick pattern perhaps, or a move above the recent 1.3040 highs. Apart from the trend-line break, however, there are no other reversal signs – unless you count a hammer on the hourly chart - and it is possible that after this correction EUR/USD will fall back down again or consolidate. The psychological significance of 1.3000 is standing in the way of deeper penetration. At 1.2910 we get a major trend-line which would be expected to provide support; although a re-break of the 1.2984 lows on strength, would be necessary to confirm a move into the lower 1.29s.
Cable has fallen heavily after the release of poor data. It has now reached substantial support from the monthly pivot and the S1 weekly pivot clustered together at 1.5275 and there is a possibility of consolidation. However, given the strength of the current down-trend it will probably resume in time and a decisive break beneath the brace of pivots and the lows at 1.5262, would lead to further downside, with the next target at the support and resistance level at 1.5155 – and then strong support at 1.5000. The alternative scenario would be a consolidation along the current level in between 1.5300 and 1.5260, and only a breaks above 1.5345 could incline me to a bullish point of view.
Analysis By: Joaquin Monfort, Forex4you Analyst
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