ForexPros Daily Analysis May 25, 2011
What my crude oil shorts are telling me about the aussie and the loonie...
The Directional Bias in crude oil has continued to pressure the market lower as the 100.00 figure looms overheads as resistance. This psychological level is the key for the bears - keeping the sentiment negative - but getting above this level is key for the bulls in order to attract buying momentum. Never underestimated the power of a whole round number…
The 34EMA Wave is moving lower at between “four and six o’clock” on the daily chart. With the fears of a slowdown in China, with fears of a more pronounces correction in U.S. equities, and with the U.S. Dollar continuing to find support above 76.00 there is potentially more downside to come in commodities.
Therefore as I set up swing shorts on the bounces between 99.50 and 101.00 in crude oil, I am also looking for exhaustion and breakdowns in the AUD/USD and will buy pullbacks in the USD/CAD.
The USD/CAD daily has a bullish Directional Bias so I will look for pullbacks on not only the daily but also the 240-minute time frame.
The AUD/USD is still consolidating although has pushed past recent lows. The 240-minute offers a swing off the 34EMA Wave while the daily is setting up a momentum breakdown if prices trade through 1.0480.
Forex Trading Analysis written by Raghee Horner for ForexPros. For more information about currency charts visit ForexPros.
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