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AUDUSD Technical Analysis
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We have been paying close attention to the Australian Dollar (AUD) since the Reserve Bank of Australia (RBA) warned FX traders AUD is will continue to weaken in the Forex market. Despite the People’s Bank of China (PBOC) monetary easing, AUDUSD has corrected almost all its gains at the time of this writing. We suspect the RBA is conducting stealth interventions in the Forex market in order to weaken the Australian Dollar, a similar approach that was adopted by the Reserve Bank of New Zealand (RBNZ), which was a great success. We will seize every opportunity we have to short the Aussie against a basket of currencies, preferably in AUDJPY, GBPAUD, AUDCAD or EURAUD.
AUDUSD Monthly Chart
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It appears there was a monthly entry in AUDUSD (top Head-And-Shoulders) but we have simply missed the boat as executing the short trade at the time of this writing will require a substantial stop loss order, which we refuse to accept. We are unable to find a technical entry to join the bearish trend aside AUDJPY which we will soon discuss but do suggest to lower the market exposure to AUD. If the RBA is conducting FX interventions it will be revealed within the next several months. We suggest to all trades to focus on the Australian Dollar and consider sell-on-dips strategies in the upcoming week.
EURUSD Technical Analysis
The fate of EURUSD is unclear at the time of this writing. We see room for further gains in the currency pair but our analysis is failing to provide us with a technical entry. Nevertheless, at the monthly close we will publish our medium-term trades in multiple markets including in FX in which we receive a confirmation to execute a long trade in the market. It is essential to highlight there are market speculations the European Central Bank (ECB) may expand its monetary easing program. It is difficult to determine at this stage whether it will have a negative effect on Euro-Dollar.
According to the Commodity Futures Trading Commission (CFTC), traders have increased their short holdings in EUR, which in our view leaves room for a possible squeeze should risk appetite prevail in the upcoming week.
USDJPY Technical Analysis
We have issued our USDJPY technical research during the previous week, indicating a great possibility for a reversal on the weekly-close. We would like to update that the negative divergence was negated on the weekly close, however, we are now seeing multiple short entries in the daily chart. The currency pairs and crosses that we are focusing on for our trading strategy are EURJPY, GBPJPY, AUDJPY and USDJPY. We are hesitant with USDJPY as the market could still correct higher before initiating the trend reversal. Our best choice would be AUDJPY as we have explained earlier, we believe the RBA is intervening in the market in order to weaken the Aussie at the time of this writing.
AUDJPY Monthly Chart
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GBPJPY Daily Chart
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In AUDJPY, we are placing our protective stop above the monthly resistance at 102.70. The trade is executed based on multiple technical signals for a strong Japanese yen and our fundamental observation the RBA is in conducting FX interventions in the market. Our bearish target for the Aussie-yen is 98.80. We are aware of the negative swap that will be incurred at the rollover but do not allow it to disturb the short trade due to the decent Risk-Ratio (RR).
GBPJPY recent gains are merely corrective following the bearish engulfing on the daily chart. We are highlighting that not all our technical indicators are inline with the analysis but we nevertheless taking the trade due to the stop’s size and our bearish projection for JPY. Analysts are beginning to revise their forecasts for an interest rate hike by the Bank of England (BOE) to mid 2015, which may assist in GBPJPY bearish retracement. Protective stop is layered at 186.35, targeting 181.60. Corrective gains towards the resistance (186.00, a re-test) cannot be ruled out before the reversal takes place.
25/11/14 UPDATE: AUDJPY short trade is in approximately +40 pips profit at the time of this writing following the Bank of Japan (BOJ) minutes that showed members are concerned of further QE measures. AUDJPY is trading at 101.67 at the time of this writing. We are closing 20% of the short trade at market price.
GBPJPY is trading at 185.32 at the time of this writing, no action is taken as the trade is in minimal profit.
25/11/14 UPDATE II: As Koruda’s conference is taking place, the Japanese yen posted marginal gains against a basket of currencies. GBPJPY is now trading at 184.96 at the time of this writing. We are closing 25% of the short trade at market price and shift the protective stop loss order to the entry.
AUDJPY is trading at 101.45 at the time of this writing. We are closing 10% of the short trade at market price and shift the protective stop loss order to the entry.
25/11/14 UPDATE III: AUDJPY is trading at 101.08 at the time of this writing, almost +100 pips profit since the trade as initiated. We are closing 10% of the trade at market price. The downsize is required in order to tolerate the negative swap.
26/11/14 UPDATE: AUDJPY is trading is 100.64 at the time of this writing. We are closing 30% of the short trade at market price and shift the protective stop to 101.28. GBPJPY trade was stopped at the entry but we were able to realize profits on the position.
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