Australian Dollar: USD/AUD (AUD=X) Breaks Major Level

Australian Dollar: USD/AUD (AUD=X) Breaks Major Level

Australian Dollar: USD/AUD (AUD=X) Breaks Major Level

The Australian dollar has broken through the 0.60 level, an area that is important due to the fact that it was the low of the financial crisis. Now that we are through that level, we need to start looking back along the lines of 20 years ago. The 0.58 level will be a support level, but it’s very likely that we could find ourselves going even lower than that due to the acceleration of the downside. Don’t get me wrong, there is going to be a vicious bounce sooner or later, but you can’t try to catch this falling knife. The Australian dollar is in serious trouble, and there is a shortage of US dollars around the world.

With that being the case, I believe that eventually this will be the “buy of the century”, but we aren’t there yet. At this point, it looks as if this market is going to continue to check off every 100 pips, which in a scenario like this that’s all you can use as a guideline. The 0.55 level could be the target eventually, but in the meantime it’s probably best to trade this market from a short-term chart, and simply fade rallies as they occur. I would be very cautious about trying to go long of this market, but if and when we get a weekly signal to start buying, that could be the beginning of the end of the downtrend. I don’t think we’re there yet, and I certainly don’t see it on the charts, but it is something in the back of my mind.

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 0.65.

The projected upper bound is: 0.59.

The projected lower bound is: 0.56.

The projected closing price is: 0.58.

Candlesticks

A white body occurred (because prices closed higher 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 19 white candles and 29 black candles for a net of 10 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 10.3844. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 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 13.37. 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 12 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 -150.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 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 5 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed up 0.002 at 0.579. Volume was 84% below average (consolidating) and Bollinger Bands were 356% wider than normal.

Open     High      Low     Close     Volume___
0.577 0.581 0.576 0.579 8,837
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.62 0.66 0.68
Volatility: 28 17 11
Volume: 97,626 66,183 60,996

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 14.8% 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 47 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition.

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