As a follow up for yesterday analysis where things are turning out to be just fine even though the 0.726-0.728 lows weren’t it. Price action broke above the resistance trend line in the 4HR chart and is now trending above 74.30 price tag buoyed partly by RBA bank decision to keep interest rates unchanged citing improving economic conditions and china’s policy which supports growth. Governor Lowe also talks about the protracted low inflation which is expected to remain suppressed for sometimes even though the RBA has decided to cut interest rates to record lows. This low interest rates he said was supportive of growth, growth especially in the housing sector which has been somewhat cooling off price-wise. This was why the Asian session was particularly strong, rallying from 74.00 and making a high at 74.61which is the 161.80 level of the yesterday’s Fibonacci Hi-Lo levels.
The only economic news to watch out today is the GDT Price index which will be release sometimes around 1415-1430 GMT. I expect some volatility and probably a move up will be in the cards because of improving commodity prices. If anything, price might clear the 75.00 handle today. For now, price action might find some ceiling at the 74.65 level which is at 161.8 Fibonacci level from yesterday’s Hi-Lo. This is all from how the stochastics are behaving at the 15 min charts, they are in the overbought territory and the only thing is to be patient till the stochastics print a buy signal in the 15 min chart at the oversold zone.
Trade plan for today will be as follows:
Buy Limit: 73.95-74.30
SL: 40 pips from where you initiate a trade.
TP: Trail your profits with a 1:3 risk reward ratio.
Have a good trading day.