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Tuesday, September 21, 2021
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Australian Dollar: USD/AUD (AUD=X) Bounces on Fed Comments

Australian Dollar: USD/AUD (AUD=X) Bounces on Fed Comments

The Australian dollar bounced significantly during the trading session after initially gapping lower on Monday. The Federal Reserve looks likely to cut rates, and it’s very likely that any interest rate cut by the Reserve Bank of Australia will be matched. Because of this, it’s very likely that traders are simply trying to hedge their bets because the Australian dollar has been sold off so drastically over the last couple of months. In other words, perhaps the United States needs to catch up with Australia when it comes to loose monetary policy.

Gold has also gotten a massive boost during the trading session as well, so that of course helps the Australian dollar. The question will be whether or not the Reserve Bank of Australia has an extraordinarily dovish statement later in the day. If they do, then it’s very likely that the Aussie could roll right back over. However, the Federal Reserve is going to be paid more attention to, and therefore if they give the rate cuts the people were expecting, it’s likely that we will continue to see US dollar weakness, at least in the short term.

A bounce towards the 0.67 level is possible but having said that it’s very difficult to get aggressive in one direction or the other right now. It is after the central bank statement coming out of Canberra that we will be able to trade this with a little bit more confidence. Having said that, it is fair enough to say that it is oversold, so a bounce could make a certain amount of sense. With this, I’m cautiously optimistic for the next couple of days but then expect a complete turnaround.

Technical Indicators

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: 0.66.

The projected lower bound is: 0.64.

The projected closing price is: 0.65.

Candlesticks

During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 19 white candles and 27 black candles for a net of 8 black candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 51.3370. This is not an overbought or oversold reading. The last signal was a buy 2 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 29.72. 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 16 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 -90. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed down -0.000 at 0.654. Volume was 97% below average (consolidating) and Bollinger Bands were 49% wider than normal.

Open     High      Low     Close     Volume___
0.654 0.654 0.653 0.654 1,293
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.66 0.68 0.68
Volatility: 9 8 8
Volume: 61,530 52,303 60,439

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.

Summary

FOREX AUD= is currently 4.4% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 35 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition.

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