Good morning team,
A close call on our GOLD position, however the sharp turn lower due to the FOMC minutes release should play into our bearish setup. The DXY turned sharply higher this morning post-announcement as expected. The market reaction to the FOMC minutes has been a classic hawkish response. Talk about the balance sheet shrinking and a high comfort level with hiking soon have pushed odds of a March hike to 80%. The dollar has rallied, yields are up and stocks are down due to a taper tantrum – the reality of decreased money supply is setting in across all risk assets, even cryptos are down across the board.
DXY – 1 Hour Chart
We can count a five-wave rally and a corrective a,b,c pull back on the DXY. This indicates a bullish trend is unfolding.
AUDUSD – 1 Hour Chart
The AUD will be the most vulnerable currency to a risk-off move in the market. There has been a lower high which indicates a possible change in trend.
Trade Setup: SELL market execution, current price 0.7217, stop loss 0.7290 and take profit targets 0.7083-0.6995.
Stop loss: 73 pips
Take profit: 134-222 pips