The Australian dollar traded slightly lower after Reserve Bank of Australia governor Glenn Stevens said in a speech that the bank's monetary policy has kept inflation on a reasonable track but that recent data suggests the inflation rate is more likely to rise in 2008 than fall.

The Australian dollar was trading at 0.8400 usd just before his speech to a business meeting in Brisbane but then eased back to 0.8387 usd as details of the speech became known to the market.

Here is a specific technical analysis concerning AUD/USD trend for today.

The selling point is at 0.8390 or 0.8400; triggered by the breaking of the trend line and a failure to reach higher than the previous peak of 0.8407. The market swings down and changes the minor trend direction.

- Fibonacci retracement 38.2% is the target for taking profit at 0.8330
- Fibonacci retracement 61.8% is the Stop Loss at 0.8444

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages below the zero line.
The shorter term moving average is faster than the long term and is pointing downwards.
In order to find the power of the market, we use RSI (Relative Strength Index).
With RSI, we can determine that approaching the overbought area; we therefore find weakness of the market and a bearish signal.
The zero line of the ROC (Rate of Change) is very important to understand the strength of the market and as we see on the graph; it breaks the zero line and moves downwards.
We should always look at the trend line; and in this example it breaks the primary trend line and the minor trend is in a downtrend.

For the momentum oscillator we have to concentrate at the zero line and the trend of the oscillator. Stochastic is giving us the strength of the sellers, good signal of a bearish market.

Most of the indicators show us the weakness of the Australian dollar against the US dollar and the reversal of an up trend that reached the highest rate 0.8478

By Finotec’s professional analyst,
Tony B.

dealingdesk@finotec.com