For the past two trading days AUDUSD hit new 8 month highs, rallying strongly against its US counterpart however emergence of overbought territory and rejection of the key resistance area are the two main reasons why we are short biased in AUDUSD, however flat on our strategy due to expecting confirmation either ways with the FED meeting ahead.
The Important resistance level of 0.7550-0.7590 coincides with the 100% Fibonacci Trend Based Extension off January 2016 lows and March 1, 2016 pullback. It would be safe to assume that a break above 100% Fibonacci would open the road to 161.8% (0.7783), however it appears as if it was a fake breakout for the moment. An attempt to touch 76.4% Fibonacci (0.7425) is inevitable now that we have entered into overbought territory and that the daily candles indicate a possible reversal.
However, entering into a major short position, even though we are short biased, would put us in front of high risk with the FED ahead and support around 76.4% Fibonacci. However if the 76.4% or 100% levels are broken with strong momentum and daily price is closed above those levels respectively, we suggest entering long swings.
Note to Trend Followers:
Trade Setup: Attempt to go long at these levels 0.7450-0.7460
Stop loss = below 0.7425
Target 1 = 0.7525
Target 2 = 0.7600
Target 3 = 0.7700
