Australian Dollar: USD/AUD (AUD=X) Break Through .6434 Could Create Momentum Needed to Challenge 11-Year Low
The Australian Dollar plunged early in the session on Friday, moving closer to the March 3, 2009 main bottom at .6285, as traders priced in expectations of weaker domestic growth in reaction to the impact of coronavirus. However, dovish comments from Federal Reserve Chair Jerome Powell triggered an intraday short-covering rally after he suggested the central bank could cut interest rates.
Powell on Friday said the central bank will “act as appropriate” to support the economy in the face of risks posed by the coronavirus outbreak, though he said the economy remained in solid condition.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through Friday’s low at .6434 will reaffirm the downtrend.
A trade through .6750 will change the main trend to up. It will be reaffirmed by a move through the next main top at .6774. This is highly unlikely, but due to the prolonged move down in terms of price and time, the AUD/USD may be ripe for a closing price reversal bottom. However, this type of potentially bullish chart pattern is often fueled by a catalyst. In this case, the catalyst will likely be related to positive news from China.
The selling stopped on Friday stopped when the AUD/USD hit a steep downtrending Gann angle at .6434.
If the downside momentum continues on Monday then look for sellers to make another run at .6434. Crossing to the weak side of the downtrending Gann angle will put the AUD/USD in a bearish position with the next major downside target the March 3, 2009 main bottom at .6285.
If Friday’s short-covering rally resumes then look for a possible rally into a pair of downtrending Gann angles at .6604 and .6611. The latter is a potential trigger point for an acceleration to the upside.
Overtaking the angle at .6611 could trigger a surge into the next downtrending Gann angle at .6689.
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: 0.65.
The projected lower bound is: 0.64.
The projected closing price is: 0.65.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 18 white candles and 29 black candles for a net of 11 black candles.
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 29.2180. This is not an overbought or oversold reading. The last signal was a buy 1 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 21.01. 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 15 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 -155.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 14 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 7 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.004 at 0.647. Volume was 94% below average (consolidating) and Bollinger Bands were 59% wider than normal.
Open High Low Close Volume___
0.649 0.649 0.646 0.647 2,798
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: 8 8 8
Volume: 57,490 51,424 60,449
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 5.4% 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 34 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition.
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