At the moment, it is hard to determine if the president’s words has any long term implications in the financial markets or it is just meant to juice the markets. After last week impressive gains by the USD following promise of “ambitious tax reforms” and how currency manipulators led by China and Japan are going to face it rough rhetorics, it is said that the president steered clear of the topic when he had a meeting with Japanese PM in the close-door meeting over the weekend. This was after his executive order barring entry of refugees and immigrants from seven Muslim countries was rebuffed by the judiciary. At the moment though, it appears the USD is in a corrective phase and any USD upside will likely be driven by other factors outside supply and demand given that today there is no major news from US. In other news, today’s Chinese trade data easily beat expectation when exports rose by 15% with imports gaining by 25% but this is all seasonally adjusted because of the New Year but this goes on to show that the economy is vibrant. The release of this data lifted the AUD momentarily in the Asian session but it has since given that those gains.
To the charts now and in the daily chart the 1.010 level remains a reliable area of resistance for this pair. Momentum indicators are pointing for more price erosion in what appears to be the last leg of the M-formation from a potential double-top. The 20.01.2017 highs candlestick was overextended and price corrected, today’s candlestick is also at the same level and it looks like there is reducing momentum from last month’s highs.
My strategy for this pair is to sell once price close convincing below the 1.001 handle. The reason to sell will even increase if price action breaches the support trend line as shown in the daily chart. For this reason, I will trade as follow with entry in the 1HR chart and an overbought stochastics as a confirming indicator.
Sell Stop: 1.0000
Stop Loss: 1.0085-above highs visible in the 4HR chart.
Take Profit: 0.9840-support in the daily chart.
NB: if you are entering this manually, wait for a sell signal in the 1HR chart or place a sell stop as shown above.
Have a good trading day.