The Weekly Update: Our Technical Focus Remains on the Aussie

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AUD Technical Analysis

The upcoming week is enriched with economic data, which means we are bound to experience great volatility in the Forex market. We have mentioned on several occasions on our intention to increase our exposure to the Australian Dollar (AUD). and waited for the weekly close as a confirmation. There is a high probability AUD pairs will gap lower due to the weak economic data from China. Nevertheless, the Chain Manufacturing PMI did not fall below the previous figure, which may suggest limited weakness followed by a swift recovery. Before continuing with our trading strategy we should highlight that we have analysed numerous currency pairs and crosses in the Foreign Exchange market and the Aussie appears to provide the cleanest entry.

We were able to locate an entry in AUDUSD and GBPAUD. As we are already exposed to the Aussie we are uncertain if we wish to maintain a large AUD exposure as the Australian Building Approvals m/m are due in the Asian session.

AUDUSD Daily Chart

Please click on the chart to enlarge:

AUDUSD Daily Chart 01/11/15

AUDUSD Daily Chart 01/11/15

We have chosen to display the daily chart although the entry may also be taken off the weekly chart. We have noted AUDUSD painting the right-hand shoulder of the reversed Head-And-Shoulders (H&S) pattern. The recent recovery on Friday may be countered by the China Manufacturing PMI that may allow us to enter a long trade in the market with an improved risk reward ratio. As the pattern is also inline with the weekly chart, a break below the nearest support (in green) may still provide an entry.

We are dismissing what appears to be a false breakout above the neckline as the technical structure is also derived form the weekly chart.

GBPAUD Daily Chart

Please click on the chart to enlarge:

GBPAUD Daily Chart 01/11/15

GBPAUD Daily Chart 01/11/15

Similar to AUDUSD, the top H&S can be seen both in the daily and weekly chart. The difference between the two currency pairs aside the fact GBPAUD is significantly more volatile than AUDUSD is that we will also be exposed to the Manufacturing data that is due in the European session from the UK.  Having AUD exposure in AUDJPY, GBPAUD and AUDUSD is against our risk management unless there is strong evidence of an imminent reversal, backed by fundamental data. We have maintained such a high exposure in the past while shorting the indices.

We are favouring AUDUSD but it greatly depends of the opening price and the technical indicators that will react to the opening of the weekly session.

We will email you the trade alert’s details after the market opens. Please also note the weekly updates will soon be enhanced with greater technical insights.

GBPAUD Trade Alert Details

Please click on the chart to enlarge:

GBPAUD Daily Chart II 01/11/15

GBPAUD Daily Chart II 01/11/15

GBPAUD short at market price: 2.1660
Take profit: 2.0820
Protective stop: 2.1822
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 14 days

Note: This is a very tight stop and we are counting on AUD data that is due in the Asian session. As AUDUSD gap was not low enough the stop for either trade is almost identical. As a result we have decided to opt for GBPAUD.

02/11/15 UPDATE:  GBPAUD is trading at 2.1616 at the time of this writing. We are closing 10% of the short trade at market price.

02/11/15 UPDATE II: GBPAUD is trading at 2.1563 at the time of this writing. The RBA meeting is likely to have a significant impact on all AUD pairs and crosses. There are some expectations for a rate cut in today’s meetings although we are uncertain the RBA will indeed slash rates.

Please click on the chart to enlarge:

GBPAUD Daily Chart 02/11/15

GBPAUD Daily Chart 02/11/15

Lower rates may inflate the housing bubble in the country and the RBA may rely on the People’s Bank of China (PBOC) easing measures to boost the economy. Nevertheless we are choosing to close 20% of the short trade at market price (2.1563). We may shift the protective stop as we near the RBA meeting that is due at 03:30am GMT.

03/11/15 UPDATE: We will begin by saying that although AUD strength is expected to resume we must reduce our exposure ahead of the RBA meeting. We were hoping to achieve a greater distance from the market in our GBPAUD short trade.

Please click on the chart to enlarge:

GBPAUD Daily Chart 03/11/15

GBPAUD Daily Chart 03/11/15

GBPAUD may retrace higher before the RBA meeting as traders adjust their positions. To conduct a healthy risk management we are closing 20% of the short trade at market price (2.1513) and shift the protective stop to the entry.

03/11/15 UPDATE II: GBPAUD is trading at 2.1421 at the time of this writing.

Please click on the chart to enlarge:

GBPAUD Daily Chart II 03/11/15

GBPAUD Daily Chart II 03/11/15

We are closing 10% of the short trade at market price and shift the protective stop to 2.1595.

 03/11/15 UPDATE III:  GBPAUD is trading at 2.1448 at the time of this writing.

Please click on the chart to enlarge:

GBPAUD Daily Chart III 03/11/15

GBPAUD Daily Chart III 03/11/15

We have noted the potential for top Head-And-Shoulders (H&S) on the 4hr chart. We are shifting the protective stop to 1.1567 and close 10% of the short trade at market price.

04/11/15 UPDATE: Recent gains in GBPAUD triggered the protective stop of the short trade. We have liquidated several partials with a decent profit and shifted the stop above the entry to ensure a profit will be made.

The Weekly Update: Our Technical Focus Remains on the Aussie
As GBPAUD short 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 Weekly Update: Our Technical Focus Remains on the Aussie

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The Weekly Update: Our Technical Focus Remains on the Aussie

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The Weekly Update: Our Technical Focus Remains on the Aussie