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AUD/USD Short-Term Retracement (February 12, 2014)
AUD/USD made a strong break above a recent resistance level, thanks to reassuring comments from Fed Chairperson Janet Yellen. However, price seems to be stalling around the .9000 major psychological level and might need to make a pullback before resuming its rally.
Stochastic is pointing down from the overbought zone, indicating that a quick selloff may be in the cards. If that’s the case, the pair could dip to the former resistance level, which lines up with the 50% Fibonacci retracement level. If stochastic reaches the oversold region and crosses upward then, it might be a signal for a bounce.
Going long at the 50% Fib or the .8975 area with a stop below the 61.8% Fib or at .8950 and a target of new highs could yield a good return on risk for a short-term trade. Be mindful of the upcoming Australian jobs release though if you’re holding on to the trade until Thursday’s Asian trading session.
By Kate Curtis from Trader's Way
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