SHARP INTRADAY PULLBACK INSPIRES FRESH LONG
Eur/Aud: We came in this morning and saw the market very overextended intraday after just managing to take out the previous yearly lows by 1.7150 from early June. The daily Average True Range (ATR) for the cross has also been exceeded and we would expect any additional pullbacks intraday to be well supported. In the event that we do see the start to a significant corrective bounce over the coming sessions, there is the potential for the formation of a major medium-term double bottom with an eventual break back above 1.8100 to trigger the basing pattern and open fresh upside towards the 1.9000 area. Fundamentally, the cross has been inversely correlated to global equity and commodity prices and any sign of a pullback in these markets should generate some sizeable profit taking from shorts. With US equities now trading above the 70 handle on the daily RSI, we like the potential upside that the trade offers. POSITION: LONG @1.7150 FOR AN OPEN OBJECTIVE, STOP @1.6950.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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