Prices appears stable this morning, staying mostly around the trading range seen during Friday's US session. There was a small pop during opening hours but prices quickly pushed lower after tagging the soft resistance of 0.9255. As the decline wasn't sparked by any news nor was it in line with the broad bullish market sentiment (Asian stocks are in the black with Nikkei 225 +0.43% while ASX 200 +0.71%), the decline was only driven by pure market sentiment alone.
Hourly Chart
This highlights the strength of bears, and suggest that the possibility of further bearish correction remains. The attempt to break soft support 0.924 failed this time round, but a retest of 0.924 may be possible especially since Stochastic indicator agrees with Stoch curve likely to reverse around the "resistance" level of 65.0. That being said, it should be remembered that prices actually started bullishly today, and overall trend remains broadly bullish in the short-run. Hence, we should not be expecting a landslide in prices. Furthermore, even if 0.924 is broken, price will likely find support around the consolidation zone seen between 26th -27th March, and failing which the 0.92 round figure will come into play.
Daily Chart
Long-term chart is more bearish though, as prices appears to be topping around the 0.93 significant resistance level. Stochastic indicator concurs as Stoch curve has already U-turn and crossed the Signal line, suggesting that a Stoch is likely in place. That being said, we are still a distance away from a proper bearish cycle signal, and that is likely to happen should price levels break the narrowing wedge top which will open up a move towards lower wedge.
It is difficult to see whether prices will be able to breach the lower wedge altogether, as bullish momentum from late Jan 2014 remains in play. Also, lower wedge is likely to be confluence with the 0.913 ceiling, and as such stronger support should be expected.
On the fundamental side of things, as central bank RBA has signaled that they would like to keep interest rates stable in the next few months, the risk of rate cuts have shrunk considerably and as such declines due to rate expectations have disappeared. Economic prospect have brighten up a little as well, with latest employment data much stronger than expected. However, with China's economy at risk of a collapse, there remains downside risks to Australia's economy who exports mainly to China.