Fibonacci Scalping Plan For The AUD/USD

The USD is taking some major heat today, amid negative economic data and the coming FOMC minutes. Performance of the greenback has been lagging across the majors, with the AUD, JPY and Euro leading the charge.

After what has been a five or six-session quiet period on the forex, today has brought some action to the markets. Volatility is a good thing; it creates opportunity. So, let's align risk with reward and embrace the active markets.

AUD/USD Technicals

The Aussie has posted considerable gains against the USD over the past two sessions, coming off of a period of sustained selling pressure.

AUD/USD, Daily Chart

A few of the important technical levels for today’s session:

• Resistance(1): 38% Fibonacci retracement of current wave, .7607

• Resistance(2): Bollinger MP, .7661

• Resistance(3): Daily SMA, .7676

• Support(1): Swing low, .7531

• Support(2): 50% yearly retracement .7475

Bottom Line: Taking accurate Fibonacci retracements is considered by many to be an artform. Many traders incorporate Elliot Wave analysis to achieve optimal results. While Elliot Wave can certainly become complex quickly, a simple “spike to spike” or time period guideline for Fibonacci retracements may be obvious and effective.

For today’s U.S. session, shorts from .7605 are likely to create positive price action to the bear. Taking a long-term position from this level may prove effective, but with the FOMC minutes out in a few hours, I prefer to grab any available profits quickly. I will be looking for a 5-10 pip take profit with the initial stop located above .7615.