AUD/USD has sold off because of the weak Australian CPI reading but this might merely spark a large correction for the pair’s ongoing uptrend. On the 4-hour time frame, a rising trend line can be drawn to connect the lows of the price since mid-January this year.

Using the Fibonacci retracement tool on the latest swing high and low shows that the 50% Fib is in line with the trend line and former resistance area. Stochastic is already in the oversold zone, suggesting that selling pressure is exhausted.

Going long at .9230 with a stop below the 61.8% Fibonacci retracement level and .9200 could yield a high return on risk with a target of the previous highs around .9450.

By Kate Curtis from Trader’s Way