AUDUSD - Bearish and sell rallies

Yesterday’s bullish signals for the AUDUSD were initially confirmed with an overall gain of 1 ¼ Big Figs. However, with weekly signals pointing to just a temporary improvement, investors sold the rally from close to 1.0575, a 78% recovery to the entire 2012 losses (1.0857-.9581), for sentiment to deteriorate by 1 ½ Big Figs from the day’s 1.0581 top. This is negative, but intraday signals for sentiment are oversold and bounces therefore have to be expected. With this in mind, the outlook for Friday is to stay modestly short, allowing room to sell a rally at 1.0510 with a stop at 1.0540.

The immediate profit objective is 1.0446/51, today’s Asian low, with a move through this point targeting 1.0384, the 27^th July base and then towards 1.0330.

The risk to this call however would be with buying through a stop at 1.0540, a cautiously positive signal improving sentiment to 1.0581, yesterday’s top.