IFC Markets - Analytics

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    Technical Analysis AUDUSD : 2016-01-26

    Will the trend upwards resume?

    The Australian dollar has corrected upwards from its recently hit 7-year low amid increase in global oil and commodity prices. On Wednesday the 4Q 2015 inflation data will come out in Australia which is expected to have increased slightly to 1.6% year over year compared to 1.5% in Q3. In our opinion, this factor is positive. Will the Aussie continue strengthening?

    The base rate in Australia is 2% which is far above the rate in the other developed countries. This fact supports the Aussie’s rate. For its more active reversal the GDP data for Q4 2015 are needed which are expected on March 2, 2016. We believe the Australian dollar will be driven by commodities prices and US currency dynamics. Let’s consider an option of opening the long which is coherent with technical analysis. The majority of investors are of different opinion yet. The net shorts in Australian Aussie have almost doubled last week compared to the previous week, according to Commodity Futures Trading Commission covering data up to January 19.



    On the daily chart AUDUSD: D1 is slightly correcting upwards within the descending trend. It has recently hit a fresh 7-year low. Nevertheless, the Parabolic and MACD indicators give buy signals. RSI has left the oversold zone and is neutral below 50, no divergence. TheBollinger bands have widened a lot which may mean higher volatility. The bullish momentum may develop in case the Australian dollar surpasses the last fractal high and goes back to the previous rising channel at 0.706. This level may serve the point of entry. The initial risk-limit may be placed below the 7-year low, Parabolic signal and two last fractal lows at 0.682. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic signal. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 0.682 without reaching the order at 0.706, we recommend cancelling the position: the market sustains internal changes which were not taken into account.


    Position Buy
    Buy stop above 0,706
    Stop loss below 0,682

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