AUD/USD continued its near two-week slide after a report showed US CPI rose to a two-year high. Prices ex-food and fuel increased by 0.3%. The gain was attributed by higher rents on an apartment shortage and medical care costs. AUD/USD fell below the 100-day SMA and is attempting to reach the 50-day SMA.
The AUD/USD shows that the since forming a three-drives-to-a-top pattern at .8162, price has retreated swiftly and the bullish recovery appears over. If the .7800 level breaks, we could see fresh lows target the .7750 zone. To the upside the .80 handle will provide major resistance.
The trade: SELL AUD/USD at .7850, with a stop loss at .7750 and take profit at .7900. The risk/reward ratio is 1:2
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading