The AUDUSD continued higher today, boosted by risk on flows and continued extension after moving above the 200 day MA on Tuesday (at 1.0276). The move higher today accelerated the trend higher – moving above channel resistance (see chart above). The price however, has moved back into the channel which could be the first sign that a correction may be forthcoming. The trend line comes in at 1.0418 currently.
On a correction the targets are at:
- 1.0409 (38.2% of the days range)
- 1.0399 (midpoint of the days range)
- 1.0392 (200 bar MA on the 5 minute chart) and
- 1.0384 (38.2% of the move up from the low yesterday before the last trend leg higher).
The Dow is up 38 points but nearly all of the gains is due to IBM. A reversal in the stock market could help with a correction. If the price should move back above 1.0417-25 area all bets are off. A top is trying to be predicted off a trending market. So risk should be limited as picking tops can be dangerous in a trend move.
