The Weekly Update: The Australian Dollar Technical Outlook

[indeed-social-media sm_list=’fb,tw,li,goo,xg’ sm_template=’ism_template_3′ sm_list_align=’horizontal’ sm_display_counts=’false’ sm_display_full_name=’true’ sm_disable_mobile=1 ]

AUDUSD Technical Analysis

After analysing multiple currencies in the Forex market we can conclude that the technical entries are very limited. We were unable to fully capitalize over EURNZD in our previous trade alert, the New Zealand Dollar strength is expected to remain intact but unfortunately there are no possibilities of re-entering at the time of this writing. The key risk of buying NZD against a basket of currencies at current levels is incurring an immediate drawdown, which we do not favourite at all.

We have expressed our intention to short the Japanese yen (JPY) against a basket of currencies on expectations the Bank of Japan (BOJ) will expand its Quantitative Easing (QE) program by up to 10 trillion yen at the end of October. USDJPY has retraced lower but unfortunately the technical correction was too deep and does not allow a daily entry in the market at the time of this writing.

AUDUSD Trading Strategy

In light of current market conditions we are using medium to long-term projections to determine our entries.

AUDUSD Monthly Chart

Please click on the chart to enlarge:

AUDUSD Monthly Chart 27/09/15

AUDUSD Monthly Chart 27/09/15

We have spotted the top Head-And-Shoulders (H&S) in AUDUSD in our past market analysis but we were unable to join the downtrend on the monthly chart once the neckline gave way. Once the price breaks below the neckline the price tends to decline in waves. To clarify, after excessive selling the price often corrects higher before reversing lower. The last dip as we highlighted on the chart resulted in approximately +500 pips.

AUDUSD encountered a support level at 0.6890 that lead to corrective gains in the pair. We would have preferred a re-test of 0.6680 but as you know we do not dictate which support and resistance levels must be tested. If the monthly support holds we would expect the price to correct higher before reversing lower unless the bulls are able to drive the Aussie above 0.7600, which may suggest the downtrend has been invalidated. The objective of the top H&S is seen at 0.6320. It is important to highlight that the monthly candlestick will close in several days as we approach October, 2015.

To perfect the technical signal we are using the daily chart.

AUDUSD Daily Chart

Please click on the chart to enlarge:

AUDUSD Daily Chart 27/09/15

AUDUSD Daily Chart 27/09/15

AUDUSD has tested the daily support as you may see from the daily chart. which may paint reversed H&S, inline with the monthly projection for Aussie Dollar. What we would prefer is a bearish gap towards the nearest support (in black), which would enhance the risk reward ratio of the long trade. A gap higher will be more challenging as we may either dismiss the trade or opt for a 4hr entry. Although we have used an intraday stop for a daily entry on multiple occasions it does bear a greater risk that we must highlight. The target for AUDUSD would be 0.7500. The entry and the protective stop order will be determined after 21:00 GMT when the markets open. Our analysis shows the USD may be poised for further weakness against a basket of currencies aside EURUSD and possibly USDJPY. At the time of this writing AUDUSD is providing us with a cleaner entry.

The trade alerts details will be sent to you via email after 21:00 GMT.

AUDJPY Trading Strategy

Although we are not keen on excessive exposure to a single currency (AUD in this case) we are bearing the BOJ in mind so it is more about JPY rather than AUD.

AUDJPY Daily Chart

Please click on the Chart to enlarge:

AUDJPY Daily Chart 27/09/15

AUDJPY Daily Chart 27/09/15

The reversed H&S can easily be noted from the daily chart. The difficult part of the trade alert is that the long lower shadow of the previous session (24 September). We are only mentioned AUDJPY as we will only consider a long trade if the price gaps +60 pips lower (approx.) that may allow us an intraday entry. It will be a difficult entry and should we enter we are likely to use  relatively tight stop. We are still exploring other JPY pairs and crosses in an effort join the anticipated JPY selling in the Forex market including GBPJPY.

AUDUSD Trade Alert Details

Please click on the chart to enlarge:

AUDUSD Current Daily Chart 27/09/15

AUDUSD Current Daily Chart 27/09/15

AUDUSD did not gap lower, which is very challenging as we do not wish use a large stop. We are therefore opting for an intraday stop.

Long at market price (0.7024)
Take profit: 0.7500
Protective stop: 0.6924
Risk Ratio (RR): 1 : 5 (approx.)
Estimated duration: 21 days

01/10/15 UPDATE:  AUDUSD is trading at 0.7071 at the time of this writing. The gains emerged following the monthly close and we have enjoyed positive interest on the long trade.

Please click on the chart to enlarge:

AUDUSD 4hr Chart 01/10/15

AUDUSD 4hr Chart 01/10/15

We are closing 20% of the long trade at market price. We are uncertain at the time of this writing whether the gains will continue on Friday due to the Non Farm Payrolls.

02/10/15 UPDATE: AUDUSD is trading at 0.7028 at the time of this writing.

Please click on the chart to enlarge:

AUDUSD 4hr Chart 02/10/15

AUDUSD 4hr Chart 02/10/15

We are closing 30% of the long trade at market price and shift the protective stop to 0.6970.

05/10/15 UPDATE: AUDUSD is trading at 0.7086 at the time of this writing.

Please click on the chart to enlarge:

AUDUSD 4hr Chart 05/10/15

AUDUSD 4hr Chart 05/10/15

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

06/10/15 UPDATE: AUDUSD is trading at 0.7113 at the time of this writing.

Please click on the chart to enlarge:

AUDUSD 4hr Chart 06/10/15

AUDUSD 4hr Chart 06/10/15

We are closing 10% of the long trade at market price and shift the protective stop to 0.7059.

06/10/15 UPDATE II: AUDUSD is trading at 0.7142 at the time of this writing.

Please click on the chart to enlarge:

AUDUSD 4hr Chart 06/10/15

AUDUSD 4hr Chart 06/10/15

We are closing 10% of the long trade at market price and shift the protective stop to 0.7065.

07/10/15 UPDATE: AUDUSD is trading at 0.7194 at the time of this writing. The pair has encountered what appears to be a firm resistance level. We are shifting the protective stop to 0.7130.

07/10/15 UPDATE II: Despite the rally AUDUSD has reached a strong resistance level on the daily chart. Although it may very well break above we are uncertain this will be the case initially.

Please click on the chart to enlarge:

AUDUSD Daily Chart 07/10/15

AUDUSD Daily Chart 07/10/15

We are therefore closing AUDUSD long trade at market price (0.7214) and finish the trade with a decent profit.

The Weekly Update: The Australian Dollar Technical Outlook

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 Weekly Update: The Australian Dollar Technical Outlook

MEMBERSHIP PLANS INTRADAY STRATEGIES OUR TRADE ALERTS
The Weekly Update: The Australian Dollar Technical Outlook

performance4 edit1

The Weekly Update: The Australian Dollar Technical Outlook