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Yesterday I wrote that I was really hoping for a weaker than anticipated CPI reading for Australia. My reasoning was that because we already had strong momentum to the downside, then any more negative news would send us tumbling.

As it turns out, that is exactly what happened.

The big support level at 0.7750 got taken out quite comfortably and we are now still very much in a big downtrend. Just taking a look at the risk/reward situation at the moment and it’s clear that the downside support level that we are going to reach next is likely to be 0.7579. If we use overheard resistance as an exit point then we are getting a decent risk-reward on a longer-term play.

And most importantly, we have a big trend and fundamentals on our side.

 

AUD/USD – 240 min Chart.