In light of recent market developments we thought it pertinent to provide an update toyesterday’s Scalp Report. Although today’s FOMC rate decision and subsequent press conference provided little in the way of new insight into the Fed’s policy outlook, the recent rebound in risk appetite saw price action narrow into our ranges and accordingly owe have adjusted our targets. Note that this pick-up in sentiment is largely technical with our fundamental outlook remaining intact. Overnight we await the ECB interest rate decision and further developments out of Europe for clarity on market conviction.

AUD/NZD Scalp Setup

The AUD/NZD pair broke above the upper bound trendline resistance of the descending channel formation dating back to October 25th. Interim resistance now stands at 1.3095 with our topside limit holding closely at four month highs at 1.3120. A breach here negates our bearish bias with such a case eyeing topside targets at 1.3150 and the 161.8% Fibonacci extension September 19th and October 5th troughs at 1.3185.

Initial support targets are held at former trendline resistance, currently at 1.3060. A break here eyes subsequent profit targets at 1.3025, the 1.30-figure, and 1.2970. Our bottom limit rests at the 100% extension at 1.2935 with an extended drop eyeing the 1.29-handle and 1.2870. Hourly ATR has contracted significantly since yesterday and accordingly a new read of 21.49 yields profit targets of 27-31pips depending on entry.

*Note that the scalp will not be active until a break below 1.3060 or a rebound 1.3095 with RSI conviction. We will remain flexible with our bias with a move passed the topside limit at the 1.3120 eyeing topside targets.

Key Thresholds

AUD/USD Scalp Setup

The Australian dollar has continued to range between 1.0280 and the 23.6% Fibonacci extension taken from the September 1st and October 27th crests at 1.0426. Interestingly, today’s rally in equities did not provide proper lift for the aussie as one would expect suggesting that there may yet be further downside potential. Having said that, we cannot rule out that the AUD/USD pair may be carving our an interim bottom here and our bearish bias will remain intact so long as price action holds below the 1.05-figure. Recent price action has continued to consolidate into the apex of a short-term wedge formation with a downside break favored.

Interim support holds at 1.0280 with subsequent profit targets eyed at the 38.2% Fibonacci extension taken from the September 1st and October 27th crests at 1.0225, and 1.0195. Topside resistance holds at 1.0385 with a breach eyeing subsequent ceilings at the 23.6% extension at 1.0425 and the 1.05-figure. A break above our topside limit at 1.05 negates the bias with such a scenario eyeing topside targets at 1.0550 and the 1.06-handle. An hourly ATR of 39.44 yields profit targets of 30-34pips depending on entry. Should ATR pull back dramatically, adjust profit targets as needed to ensure more feasible profit targets.

*Note that short-scalps will not be active until a break below 1.0280 or a rebound off 1.0385or subsequent resistance levels with RSI conviction. We will remain flexible with our bias with a move passed the 1.05-figure eyeing topside targets.

Key Thresholds

---Written by Michael Boutros, Currency Analyst with DailyFX.com

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