The Australian CPI came in stronger than expected earlier today (see data here). The initial reaction in the Asian session was to the upside in the AUDUSD on expectations that the RBA may look to tighten further in November. The price high reached up to a natural resistance level near 0.6400, but found sellers.
The move lower increased momentum after the price fell back below the 50% midpoint of the range since the October 11 high and 0.63655.
Momentum down continued after the break of the Asian session low near 0.6345. The price reached to – and through – the near converged 100 and 200-hour moving averages and a swing area between 0.63269 to 0.6334 (see blue number circles). After a bounce higher off the low of that swing area, the momentum down continued (helped by lower stock prices in the US i.e., risk off.
We are now seeing a rebound back toward the 100 and 200 hour moving averages which are converged near 0.6334. Those moving averages will act as barometers for the buyers and sellers in the short term. Move above with momentum and get back above the broken 38.2% retracement of 0.63467, and it would give sellers some “cause for pause”. We could see a further run back toward the 50% retracement of 0.6365.
Conversely if the sellers can keep the heat on, breaking back below the low of the aforementioned swing area down to 0.63269 (see blue number circles), should see more downside momentum toward the swing lows that defined the pair’s floor in October between 0.6284 and 0.62886.
Sellers are back in control, but traders are watching that 100 and 200 hour moving average for clues going forward.
This article was written by Greg Michalowski at www.forexlive.com. Source