Here is a really interesting setup where both, the fundamentals and the technical background are in line.
Fundamental: Monetary Policy divergence
According to RBA official Christopher Kent, the central bank doesn't exclude to intervene. This comes after the RBA commented on the overvaluation of the Aussie recently which is bearish. The countercurrency (USD) though currently in a correction is in a strong bullish trend due to speculations over an imminent rate hike upcoming for 2015.
Technical:
The price is now approaching a strong supply zone materialized by an unfilled bearish gap, the approach/test of the 200 periods EMA in an already bearish trend (see higher time frames) and the stochastic oscillator comes in confirmation being deeply overbought (upside potential limited and probably signaling the start of a reversal).
Trade setup: See chart
Entered short at 0.8760 (short entry still valid above 0.8750)
SL at 0.887
TP 1: 0.8650 or for longer term riders TP2: 0.8381 further continuation remains probable
Fundamental: Monetary Policy divergence
According to RBA official Christopher Kent, the central bank doesn't exclude to intervene. This comes after the RBA commented on the overvaluation of the Aussie recently which is bearish. The countercurrency (USD) though currently in a correction is in a strong bullish trend due to speculations over an imminent rate hike upcoming for 2015.
Technical:
The price is now approaching a strong supply zone materialized by an unfilled bearish gap, the approach/test of the 200 periods EMA in an already bearish trend (see higher time frames) and the stochastic oscillator comes in confirmation being deeply overbought (upside potential limited and probably signaling the start of a reversal).
Trade setup: See chart
Entered short at 0.8760 (short entry still valid above 0.8750)
SL at 0.887
TP 1: 0.8650 or for longer term riders TP2: 0.8381 further continuation remains probable