Australian Dollar: USD/AUD (AUD=X) further weakness

Australian Dollar: USD/AUD (AUD=X) further weakness

Australian Dollar: USD/AUD (AUD=X) further weakness

The Australian dollar has gapped lower to kick off the week, as we continue to have a lot of coronavirus fears out there, only to see the market rally and fill that gap. The fact that we are broken down below the bottom of a hammer it does suggest further weakness.

The Australian dollar has gapped lower to kick off the trading session on Monday, as we continue to have a lot of coronavirus fears out there, that of course is going to weigh upon the Australian economy as it is so highly levered to China, and of course the rest of Asia as well. As the virus is starting to spread throughout that region, it makes quite a bit of sense that the Aussies will suffer at the hands of this issue as well. A bounce from here should simply offer a nice selling opportunity, especially near the 0.67 handle.

Any signs of exhaustion in this area would be a nice selling opportunity, as it would offer value in the US dollar. If we were to break down below the bottom of the candlestick for the trading session on Monday, that could send this market towards the 0.63 level, which I do think is ultimately the destination as this market has completely collapsed. That doesn’t mean we get there tomorrow, and obviously we need to get in an area that offers plenty of value in the US dollar to feel confident shorting. It’s not until the market breaks above the 0.6775 level that I’d be willing to buy this market, as the Australian dollar is suffering for multiple reasons.

The Reserve Bank of Australia is very likely to cut rates relatively soon, and that of course is been priced in this market. Furthermore, the Peoples Bank of China continues to do what they can to liquefy markets, so it has a bit of a “knock on effect” over here.

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: 0.67.

The projected lower bound is: 0.65.

The projected closing price is: 0.66.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 26 black candles for a net of 5 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with FOREX AUD=), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 17.0731. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 14 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 27.06. 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 10 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 -173.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 9 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 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed down -0.003 at 0.660. Volume was 34% above average (neutral) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
0.663 0.663 0.658 0.660 65,824
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.67 0.68 0.68
Volatility: 7 7 7
Volume: 53,034 49,830 61,090

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 3.6% 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 29 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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