FxWirePro: Rally in Aussie sours with inverted hammer – option calls included

Australian Dollar's longest and biggest rally (370 pips) is close to its end as inverted hammer appearing at top.

• Fundamentally speaking, there are still considerable risks associated with Australian economy as hard commodities such as iron ore, coal are showing no signs of sustainable recovery, other than just temporary bounce.
• Moreover risks have risen considerably that Chinese growth might slow down further. Some analysts and fund managers are even fearing recession next year.
• However, Aussie is finding support in Reserve Bank of Australia's (RBA) neutral stance.

Technical are now aligning with fundamentals, which provides an opportunity to take renewed short position in Aussie.

Trade idea 

• We have long been calling for short Aussie against Dollar and two of our targets have been reached at 0.715 and 0.7. We expect Aussie to reach as low as 0.68 and 0.65 against Dollar.
   
• This inverted hammer has given opportunity to short with fundamentals and renew positions. Short term sellers can also open new shorts with stop around 0.73 area.

Australian Dollar is currently trading at 0.714 against Dollar.