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We sold the Australian Dollar against its US counterpart after prices put in a bearish Evening Star candle formation, suggestingthe currency may be carving out a top in the 0.9051-85 area (marked by the January 13 closing and swing highs). Prices descended to our initial target at 0.8919, the 14.6% Fibonacci expansion, but have since bounced as we suspected after a series of indecision candles. The overall structure of the short-term down trend remains intact however and we will remain short for now, initially looking for a daily close below 0.8919 to expose the 23.6% level at 0.8821. A stop-loss will be activated on a close above 0.9085.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com