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Currencies AUD Top Trade Idea for August 17th, 2014 – AUD/USD

fx harmonicsLast week’s projection for the EUR/USD did materialize nicely since previous hints by experts were backed up by various sources about how situation in the euro zone especially its’ overall economic outlook wasn’t too rosy but rather murky instead. In saying that, the harmonic ‘M’ pattern that was formed at the time, confirmed the downwards move of C to D leg marking the move into a bearish territory for the Euro vs. the Dollar. The reason for the mention of this long gone trade is due to the similar sort of downwards C to D move on the 1hr chart that I couldn’t help but to notice for the AUD/USD as shown below.

C:\Users\Kenny Maria\Desktop\AUD USD 17082014.png

The AUD/USD as illustrated above marks an ‘M’ pattern with some economic data yet to be released but believed to have encouraged the downward forecast of C to the probable D point. Firstly, let us not forget sentiments pertaining to the Kiwi lately following its’ recent retail sales figures, came in strong at 1.2%. What does this mean for the Aussie? Well, this could very well tell us that NZD investors maybe tempted to close their short positions very soon or do the same for the AUD too as in most trader’s mind is that there should be a positive correlation between the Aussie and the Kiwi. Is that why a bullish M pattern formed for the AUD/USD as to suggest a short term bearishness and a possibility for prices to go skywards later once the M pattern completes? If that would be the most likely scenario, then it would match perfectly well with the short term pattern that has formed where prices are expected to travel south first but to then reverse at the D point or in other words, anywhere in within the Potential Reversal Zone (PRZ) marked by the green box with price ranging between the 0.9298 to the 0.9281 area.

Now to still get that selling interests going for both the Aussie and the Kiwi, let us as traders be more aware of how things are progressing in China especially with the telecommunications sector. Some analysts of major banks believe that the earnings outlook lags index performance and hence expect potential underperformances which may impact the earnings per share of Telcos in time to come. Could all this not so cool news in China be another added correlation to the current expectations of the short term price fall for the AUD/USD? We shall then wait and see of how the M pattern plays out riding along the waves of trend created by price ripples usually stirred by fundamental factors.

Happy Pipping !

About Kenny Simon

kennysimonKenny Simon is an FX aficionado with specific interests in the principles of Geometric trading and hence he incorporates the use of Harmonic chart patterns analysis as his preferred trading methodology. His involvement as a trader initially as well as a FX Coach till date, has rewarded him with a fast growing community of Harmonic traders globally. The conceptualization of FX Harmonics is meant to launch itself as a hub offering quality education to traders of all levels in order for anyone to learn to earn consistently from trading online.  Kenny also believes in the importance of a practically sound Trade Plan whilst managing ones psychology, money and risks to be able to squeeze the best out of the financial markets for High Probability, Low Risk trade opportunities.

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