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Australian Dollar: USD/AUD (AUD=X) brace yourself for a potential two-sided trade

Australian Dollar: USD/AUD (AUD=X) brace yourself for a potential two-sided trade

The Australian Dollar was primarily underpinned last week by expectations of lower U.S. interest rates. Early in the week, the Aussie dipped a little after minutes from the Reserve Bank of Australia’s (RBA) monetary policy meeting in July showed the central bank was ready to adjust interest rates if required.

“The Board would continue to monitor developments in the labor market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time,” the minutes showed. “Lower interest rates would provide more Australians with jobs and assist with achieving more assured progress towards the inflation target.”

On July 18, the Australian government reported that employment rose a surprisingly small 500 jobs in June, but all the weakness was in part-time work with full-time jobs rising 21,100. The unemployment rate held at 5.2 percent for a third month running, underlining the challenge the RBA has in reaching its new goal of 4.5 percent.

With the RBA already having cut rates in June and July the jobs data was not considered weak enough to add to the case for another easing in August.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 0.70.

The projected upper bound is: 0.71.

The projected lower bound is: 0.70.

The projected closing price is: 0.70.

Candlesticks

During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 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 49.0641. This is not an overbought or oversold reading. The last signal was a sell 3 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 56.24. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 46 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 61. This is not a topping or bottoming area. The last signal was a sell 1 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 buy 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed unchanged at 0.703. Volume was 99% below average (consolidating) and Bollinger Bands were 21% narrower than normal.

Open High Low Close Volume___
0.703 0.704 0.703 0.703 1,000

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period     50-period     200-period
Close: 0.70 0.70 0.71
Volatility: 8 7 9
Volume: 52,732 77,659 99,375

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 0.8% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AUD= and have had this outlook for the last 21 periods.

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