Australian Dollar: USD/AUD (AUD=X) Bounce Is Slightly
The Australian dollar of course is highly levered to the Chinese economy, and of course is highly levered to global growth in general. At this point it looks as if the global growth is falling apart even further and that is going to continue to weigh upon the Aussie. However, the little bit of a relief rally that we have seen has barely put a dent in the massive selloff that we had seen on Thursday. At this point, it’s probably more short covering than anything else. The 0.62 level has been supportive, and it’s likely the market will continue to see sellers come in and fade this market on signs of exhaustion.
To the upside, the 0.65 level should be massive resistance and the biggest trick that we are going to have here is that the headlines of the week and of course will have a major influence on what happens next, and it’s very likely that the weekend will be used as an opportunity to do some type of fiscal stimulus, as we have already seen in Germany. The question now isn’t so much about what happens in Australia but what happens in the United States. We are still waiting for that answer, so until then the markets are somewhat on hold. At this point though, it does look like we are probably going to continue to fade rallies, but it should also be noted that we may see a completely different market on Monday as we are so headline driven at this point. We are getting close to the bottom of the financial crisis levels, so I think that there is a certain amount of built-in support in this general vicinity.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 0.67.
The projected upper bound is: 0.64.
The projected lower bound is: 0.61.
The projected closing price is: 0.62.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 19 white candles and 29 black candles for a net of 10 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with FOREX AUD=). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 15.1849. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 28.05. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 9 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -171.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.008 at 0.626. Volume was 90% below average (consolidating) and Bollinger Bands were 161% wider than normal.
Open High Low Close Volume___
0.613 0.630 0.611 0.626 5,249
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.65 0.67 0.68
Volatility: 27 14 10
Volume: 85,911 62,646 60,575
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX AUD= is currently 8.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of AUD= (mildly bearish). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 44 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition.