China's underperformance persists and with economic analysts starting to revise their growth forecast down to levels only seen back in 2005, it doesn't look like this outlook will turn around anytime soon. Lagging Australian economic results also continue to disappoint weighing further on this currency and with calls that further RBA cuts are required to simulate this heavily commodity driven currency, it might be a case of 'things are going to get worse before it gets better' so to speak.
This currency pairing has recently broken below the 88.48 low made back on the 5th August 2013 and there are only a few established support levels below which might concern the bulls. Looking to the downside, there are fibo price projections of 138.2% and 161.8% (of the April-August move) at 81.78 and 77.67 respectively. On the long term chart the next significant low that I can see is at 80.86 which was established all the way back on 8th June 2010, and given our current traded level is a long way off.
The 20Day SMA has been working well of late as a good support/resistance when this market is trending and we have some already trend lines that can be used to trade around, offering some potentially good selling opportunities. The RSI is also worth keeping an eye on to help avoid being caught out by an relief rallies that may occur, given that this could be quite a crowded trade so short squeezes will be aggressive.
Charts sourced from ig.com
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