Matt Simpson, CFTe, MSTA
CityIndex
The previous analysis anticipated 0.940 to cap as resistance. Whilst we did briefly break above we're now back below, following a Shooting Star Reversal candle
Above is the client flow of CitiGroup G10 currencies. It is end-of-day data so it just help assess volume activity for past price action, as a confirmation more than a predictive tool. However it is interesting to note that selling volume has increased whilst price has continued to rally up to fresh 5-month highs on AUDUSD. This provides me with slightly more confidence we may have reached an interim top, following yesterday's Shooting Star Reversal candle.
The final push up saw a break of the upper channel line. This I can live with as upper channel lines tend to be less reliable than the lower trendline, and besides they are to be used with a pinch of salt at the best of times. They merely provide structure to the analysis.
Following the BOJ minutes both AUD and NZD are selling off sharply and sustaining the heaviest losses among G20 Currencies.
I expect to close the week below 0.940, which in turn may be the beginning of a deeper pullback towards 0.93. However we also need to be open to the possibility of sideways trading and to allow time for a potential topping formation.
A break aback above 0.940 should see a continuation of the bullish trend, with a break above 0.945 opening up 0.950 and 0.955.
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