The Technical Wonders of the Australian Dollar in the Market

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AUDUSD Technical Analysis

We were planning to wait for the weekly close but we have decided to opt for the Aussie Dollar. Limited activity was noted in today’s session as you may have noticed as the market prepares for the European Central Bank (ECB) monetary policy meeting on Thursday. The Canadian Dollar (CAD) was heavily sold as the Bank of Canada (BOC) revised lower the Gross Domestic Product (GDP) projections.

AUDUSD weekly chart as well as GBPAUD weekly chart is indicating the Australian Dollar is due for moderate gains. As this is a weekly chart there is a fair possibility the anticipated gains may not materialize this week. This of course is not a guaranteed scenario and we will soon lay out the forex signal we derived from the chart. The reason why we are not opting for GBPAUD is due to the UK Retail Sales on Thursday and the fact we are already exposed to GBP.

AUDUSD Weekly Chart

Please click the chart to enlarge:

AUDUSD Weekly Chart 21/10/15

AUDUSD Weekly Chart 21/10/15

AUDUSD Daily Chart

Please click on the chart to enlarge:

AUDUSD Daily Chart 21/10/15

AUDUSD Daily Chart 21/10/15

AUDUSD Trading Strategy

AUDUSD has the potential for painting reversed Head-And-Shoulders (H&S) on the weekly chart, which required a weekly close as a confirmation. The reversed H&S can also be seen on the daily chart where we also highlighted the risk of doing so. The price could easily retrace towards the latter support (diagonal black line) before reversing higher. The weekly close often negates such possibilities but we believe the Moving Averages (MA’s) may prevent a deep retracement in AUDUSD.

The 21MA (in green) and the 55MA (in purple) may act as a firm support should the market attempt to drive price below 0.7200. The price may also correct higher without re-testing the MA’s but we are already preparing for a scenario the MA’s are tested. There may a struggle around the 100MA (in brown) should the Aussie retrace higher but if the right-hand shoulder is confirmed we would expect AUDUSD to break above the neckline and target 0.7500.

The risk we are taking is entering before the weekly close and are relying on the MA’s to tame AUD bears.

AUDUSD Trade Alert Details

AUDUSD long at market price (0.7210)
Take profit: 0.7500
Protective stop: 0.7113
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 14 days

23/10/15 UPDATE:  The PBOC slashed the lending and deposit rate by 25bps, fuelling AUD against a basket of currencies. AUDUSD is trading at 0.7284 at the time of this writing.

Please click on the chart to enlarge:

AUDUSD Daily Chart 23/10/15

AUDUSD Daily Chart 23/10/15

We are closing 30% of the long trade at market price and shift the protective stop to the entry.

23/10/15 II UPDATE: Following an extraordinary volatility in the Forex market AUDUSD retraced off its high and triggered the protective stop at our entry. We were able to realize 30% of the long trade in a fair profit.

The Technical Wonders of the Australian Dollar in the Market

As AUDUSD long trade is closed this page can  now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
The Technical Wonders of the Australian Dollar in the Market

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The Technical Wonders of the Australian Dollar in the Market

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The Technical Wonders of the Australian Dollar in the Market

Last Updated on October 26, 2015