Two Momentum Setups for the Aussie

08/28/2013 9:00 am EST

Focus: FOREX

Raghee Horner

Author, Forex Trading for Maximum Profit

There are two Aussie stories playing out that have my attention, writes Raghee Horner of InterbankFX.

Neither is in a trend and therefore these set ups are less about dominant psychologies and directional bias. I am not looking for organization of sentiment and momentum this time of year—just in front of Labor Day—where the volume and participation are low in the markets. The aussie versus the loonie is showing clear signs of a more neutral sentiment creeping into the once-established downtrend.


chart
Past performance is not indicative of future results
Click to Enlarge

The blue GRaB candles coming with more frequency as the four to six o’clock angle is succumbing to a flatter 34EMA Wave. This reflects the shift from the dominant downtrend.

chart
Past performance is not indicative of future results
Click to Enlarge

The idea behind any flattening wave is to look at the previous (dominant) trend and identify the levels of the emerging trading range.

Both the AUD/CAD and AUD/USD are setting up momentum trades as the flattening wave takes each of these daily charts from congestion into consolidation. The AUD/CAD is trading side .9534 and 0.9352 therefore wait until the breakout or breakdown occurs with MACD histogram confirmation (positive for a break through resistance, negative for a break through support). The AUD/USD is squeezing within a triangle pattern.

By Raghee Horner, Chief Currency Analyst, InterbankFX

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