Australian Dollar: USD/AUD (AUD=X) weakness may have been fueled by sell-stops rather than aggressive short-selling
The Australian Dollar is rebounding early Monday following the previous session’s steep sell-off that drove the currency to its lowest level since the financial crisis in 2009. The price action suggests that Friday’s weakness may have been fueled by sell-stops rather than aggressive short-selling.
Traders are saying that today’s strength is being fueled by early signs that the spread of the coronavirus epidemic could be slowing down. Traders are also a little more optimistic about China’s economy with some big businesses resuming work in China after the Lunar New Year holiday and coronavirus delays.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6662 will signal a resumption of the downtrend. The main trend will change to up on a move through .6774.
The minor range is .6774 to .6662. Its 50% level or pivot at .6718 is the first upside target. This level will likely control the direction of the Forex pair on Monday.
The short-term range is .6934 to .6662. If the trend changes to up then its retracement zone at .6798 to .6830 will become the primary upside target.
Daily Technical Forecast
Based on the early price action and the upside momentum, the first target is a downtrending Gann angle at .6714. Look for sellers on the first test of this angle. Overtaking the Gann angle could lead to a test of the minor 50% level at .6718. Look for sellers on a test of this level too.
Overtaking .6718 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with a pair of downtrending Gann angles at .6744 and .6752 the next potential upside targets.
Since the trend is down and the fundamental narrative remains the same, we are going to continue to look for sellers over the near-term term.
The AUD/USD could be forming a bottom, but it’s too early to tell. At this time, we’re looking for short-covering, but the outlook will change if the trend changes to up on a move through .6774.
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.
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 21 white candles and 25 black candles for a net of 4 black candles.
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 20.7980. This is not an overbought or oversold reading. The last signal was a buy 5 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 30.88. 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 1 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 -89. This is not a topping or bottoming area. The last signal was a buy 0 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 25 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed unchanged at 0.669. Volume was 90% below average (consolidating) and Bollinger Bands were 58% wider than normal.
Open High Low Close Volume___
0.669 0.669 0.668 0.669 4,826
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.67 0.69 0.69
Volatility: 8 8 7
Volume: 51,841 47,917 62,761
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 2.5% 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 20 periods.
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