Australian Dollar: USD/AUD (AUD=X) Plunges
The Australian dollar has plunged during the trading session on Thursday, as we continue to see a lot of “risk off” trading out there. Ultimately though, we are getting close to a major support level so it’s interesting to see whether or not the Aussie can hold this general vicinity. Quite frankly, this is a market that is highly levered to China and that is part of the problem. Furthermore, it’s not even about the coronavirus in China at this point, but rather the rest of the world is probably going to slow down and therefore there will be less demand for those Chinese goods.
The Australian dollar has recently seen a massive turnaround at the 0.63 handle, and therefore it will be interesting to see whether or not we can break through there. One would have to think that if we do it opens up the door down to the 0.60 level rather quickly. That being said, I think that level giving way is a real possibility so it’s something that you should be paying attention to. There are also possibilities that we could see some type of “rip your face off rally” in the short term, just as we had seen a few days ago. Unfortunately, the market is moving on the latest headline, and that’s almost impossible to prepare for other than to protect your trading capital. The easiest way to do that of course is to trade very small.
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: 0.64.
The projected lower bound is: 0.61.
The projected closing price is: 0.62.
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 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 18 white candles and 30 black candles for a net of 12 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 31.4310. This is not an overbought or oversold reading. The last signal was a sell 2 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 20.89. 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 7 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 -284.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 2 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 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.025 at 0.624. Volume was 103% above average (neutral) and Bollinger Bands were 97% wider than normal.
Open High Low Close Volume___
0.648 0.649 0.621 0.624 109,185
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.65 0.67 0.68
Volatility: 25 13 10
Volume: 91,975 62,377 60,738
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 8.6% 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 42 periods. Our momentum oscillator is currently indicating that AUD= is currently in an oversold condition.