The market opened with USD in particular getting some reprieve after a recent slump. While some intermediate corrections is expected in the commodity sector, the same should happen for USD and Yen. Remember, there is a risk off because of North Korea missile stance as they marked a national holiday with celebrations rather than another missile launch. That means, at least temporarily, investors interpreted it as positive and as a result there was a temporary dump of the Yen. In other related news, the Chinese recent easing of bank reserve requirements for Yuan futures was largely concluded as their discomfort over the strengthening Yuan. This move is important because it will make it easy for investors to liquidate the Yuan and settle for the USD especially at this time when Hurricane Irma is wreaking havoc in Florida. In the meantime, I will look to short AUD while I stock up Yen positions.
Technically, unless there is a buy signal printed in the weekly chart, I will look to short the Aussie. Bears are still in control and last week closed as a doji with immense selling pressure. Even though the markets opened with a gap up today, it is my view that this gap will likely be filled as stochastics are overbought in the 1hr chart and a bear candle will mean we go short till the gap is filled at around 86.60.
I will trade as follows:
Sell Stop: 87.10
Stop Loss: above 87.50
Take Profit: Below 86.50 for a 1:2-3 risk reward ratio
Have a good trading day.