Australian Dollar: USD/AUD (AUD=X) dangerously close to a major support level

Australian Dollar: USD/AUD (AUD=X) dangerously close to a major support level

Australian Dollar: USD/AUD (AUD=X) dangerously close to a major support level

The Australian dollar initially tried to rally during the trading session on Wednesday but gave back quite a bit of the gains heading towards the FOMC statement. Ultimately though, we are getting dangerously close to a major support level in the form of the 0.67 level which is the top of the range that the market had traded in during the financial crisis 12 years ago. In other words, the Australian dollar is extraordinarily cheap from a historical perspective so one would have to think that there will be value hunters looking to get involved. That being said, one thing that could truly help the market is if the Federal Reserve decides to be overly dovish, as it should work against the value of the US dollar longer term. Furthermore, it could drive this pair all the way back to the 0.70 level, but at this point that is all conjecture.

It is probably best to let this daily candle closes before putting money to work, because there is simply a bit of a gamble attached to any trade you put on ahead of time. If we were to break down below the 0.67 handle, we then start to look for targets every 100 pips all the way down to the 0.64 handle. That being said, it would be a very negative sign for risk appetite overall, as it would represent people running towards the US dollar for safety more than anything else. Remember, Australia is highly sensitive to Asia so pay attention to the Chinese situation as well.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 0.68.

The projected upper bound is: 0.68.

The projected lower bound is: 0.66.

The projected closing price is: 0.67.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 2 white candles and 6 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 26 black candles for a net of 5 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 15.8481. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 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 23.64. 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 sell 20 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 -153.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 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 17 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed down -0.003 at 0.672. Volume was 12% above average (neutral) and Bollinger Bands were 31% wider than normal.

Open     High      Low     Close     Volume___
0.675 0.675 0.670 0.672 55,608
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.68 0.69 0.69
Volatility: 6 7 7
Volume: 53,236 46,717 64,201

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 2.2% below its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 12 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition.

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