It’s all about the oil money. It’s the black gold and it has everything to do with economic shocks seen in OPEC and some developed countries. Talk of Canada and emerging economies as Russia. Last week there was a joint committee meeting in Vienna where the probability of a cut extension seem likely given the way major oil producers who are not members-Oman, Bahrain- of the cartel are backing it. Overly, OPEC main objective is to stabilize oil global prices and bump it up a little bit above the current $50/barrel levels. To achieve this, they have to cut production down to a 5 year average, an average which is not exceeded by close to 330M barrels if the current production inventory is compared to the average. The obvious path towards this ambitious target is to mop up the excess glut, drive out US shale producers and then extend the current cuts by another 3 and 6 months. If they do this, oil prices might recover and that is why I’m looking to unload the AUD at all highs in this currency pair.
Fundamentals to watch out today include the Canadian Retail sales data expected to slump by 0.3% and Crude Oil inventories which are expected to dip. All these will be in the NY session.
Technically, the time for this is ripe. Last month’s candle stick closed with an inverted hammer and this means selling pressure. Coincidentally, yesterday’s candlestick was also an inverted hammer forming with a sell signal printed by the stochastics. There is also price bounce from the upper BB and the confirmation today means that tomorrow will be another ride south and therefore a good time to sell.
Trading will be as follows with a minimum stop loss and maximum take profit target.
Stop Loss: 1.0280
Take Profit: 0.9920-Support zone