Market consolidates after the plunge
The AUDUSD plunged lower after the weaker than expected quarterly inflation (0.5% vs. 0.7% estimate). The problem...the price plunged so quickly only the traders who were short going into the data benefited. Those who were long got hurt. Those who traded after...well they had limited profit potential. That can lead to disappointment and corrective activity. That may be what we are seeing as the dust settles.
Looking at the 5 minute chart, the dynamics of this idea can be seen. The price plunged to 0.7117 in the first 5 minutes, it corrected to 0.7141 and then fell to the day lows at 0.7111 area. If you sold the high after the 1st 5-minutes you could have made 30 pips max. That is the max....The current price is 0.7131 more near the post data high than the low. The price is above the 100 bar MA on the 5-minute chart (blue line) but stays below the 200 bar MA on the same chart. So kinda mixed from that perspective. If the sellers are to show more control, look for a break of the 100 bar MA. If the shorts give up a move above the 200 bar MA (green line) will be eyed.
Looking at the daily chart the price is below the 50% of the move up form the September 24 low (at 0.71596). That is more bearish. The bad news is the 61.8% of that same move higher did hold the low (along with the underside of the broken trend line. So a little mixed at the current levels.
I would give the benefit of the doubt to the sellers. but look for those little clues from the 5-minute to give more confidence. Absent that, the market sellers could get frustrated and a further correction can occur.
