As go commodities so goes the AUD/USD. The recent pick up and bullish performance in commodities as a whole in Q1 of 14' have helped lift the Australian currency 6.9% in the last three months to the highest trade in 4 1/2 months. In the last six days June futures have consolidated at the .9200 level with daily stochastics starting to roll over. I am anticipating commodities taking a breather and hence think it viable to see a correction in this cross. I am not calling for a bear market but rather a tradeable move lower. Key to this is the risk to reward metric as well. I think one can work into bearish trade with stops above the recent highs.
Use the Fibonacci levels in the chart below to guide you with prices objectives. A settlement below the white upsloping trend line would confirm an interim top is in place. The darker blue line (50-day MA) coming in near .8940 is my ultimate objective. This futures contract size is $100,00, which means every 1 tic makes or looses $10 per contract. June options could also be used, which have just over 2 months time, expiring in 64 days.
