Australian Dollar: USD/AUD (AUD=X) risk aversion realized
The trade is so far doing ok as risk aversion realized. But we’ve overestimated the strength in Dollar. Still, the price actions from 0.7040 to 0.7130 are corrective looking, which reinforces our bearish view. For now, we’ll keep the stop at 0.7185, slightly above 50% retracement of 0.7314 to 0.7040 at 0.7178.
That’s because, theoretically speaking, consolidation pattern from 0.7040 could extend with another leg through 0.7130, even though it’s unlikely. Upon decisive break of 0.7040, we’ll lower the stop after AUD/USD settles below this level.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 0.73.
The projected upper bound is: 0.72.
The projected lower bound is: 0.70.
The projected closing price is: 0.71.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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 25 white candles and 25 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with FOREX AUD=). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 49.1177. This is not an overbought or oversold reading. The last signal was a buy 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 43.95. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 111 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 -56. This is not a topping or bottoming area. 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 6 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.006 at 0.712. Volume was 35% above average (neutral) and Bollinger Bands were 30% wider than normal.
Open High Low Close Volume___
0.705 0.713 0.704 0.712 139,819
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.71 0.72 0.76
Volatility: 11 11 10
Volume: 110,998 105,203 102,206
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 5.7% 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 volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 5 periods.
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