Forex Trading Alert: AUD/USD - One-day Rally or Something More?

By: Nadia Simmons & Przemyslaw Radomski | Tue, Jun 3, 2014
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Forex Trading Alert originally published on June 3, 2014, 7:54 AM


 

Earlier today, the Australian dollar rebounded against the greenback after the Reserve Bank of Australia kept its cash rate steady at a record low 2.5%. Thanks to this news, AUD/USD bounced off the support zone, hitting an intraday high of 0.9285. Did this rally change the very short-term picture?

In our opinion, the following forex trading positions are justified (stop-loss order levels were adjusted) - summary:

EUR/USD: short (stop-loss order: 1.3680)
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: short (stop-loss order: 0.9340)


EUR/USD

EUR/USD
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Looking at the weekly chart, we see that the situation in the medium term hasn't changed much as EUR/USD remains between last week's high and low. Therefore, what we wrote on Friday is up-to-date:

(...) exchange rate still remains not only below the previously-broken lower border of the consolidation, but also under the long-term declining line and the lower border of the rising trend channel (...) as long as there is no invalidation of the breakdown under these lines, further deterioration is likely. If this is the case, and the exchange rate extends losses in the coming week (or weeks), the downside target will be around 1.3516 (where the 38.2% Fibonacci retracement based on the entire March 2013-May 2014 is) or even slightly lower - around 1.3480, where the bottom of the previous bigger correction (between Dec. and Feb.) is .

What can we infer from the short-term chart?

EUR/USD
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Looking on the daily chart, we see that EUR/USD re-tested the strength of the support zone created by the 76.4% and 78.6% Fibonacci retracement levels earlier today. Taking this fact into account, we think that our yesterday's commentary on this currency pair is still up-to-date:

(...) If it withstands the selling pressure, we will see another attempt to reach the upper line of the declining wedge, which serves as nearest resistance (currently around 1.3648). At this point, it's worth noting that slightly above this level is also the 200-day moving average (at 1.3655). However if it is broken, we will see another re-test of the strength of the upper line of the declining trend channel (currently around 1.3578) or even a drop to around 1.3540, where the 88.6% Fibonacci retracement (based on the entire Feb.-May rally) meets the 141.4% Fibonacci extension (based on the Apr.-May rally).

Very short-term outlook: bearish
Short-term outlook: bearish
MT outlook: bearish
LT outlook: bearish

Trading position (short-term; our opinion): Short. Stop-loss order: 1. 1.3680.


USD/JPY

USD/JPY
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On Friday, we wrote the following:

(...) If the medium-term support line holds, we will see another attempt to move higher (...) it seems that another sizable upswing will be more likely if the pair breaks above the short-term green resistance line (currently around 102.04).

Looking at the weekly chart, we see that the situation has improved slightly as USD/JPY reversed (after a small drop below the medium-term support line) and climbed above the short-term green resistance line. So far, this move is barely visible, but if currency bulls do not give up, we may see further improvement as buy signals remain in place.

Will the short-term picture give us more clues about next moves?

USD/JPY
Larger Image

From this perspective, we see that the situation has improved significantly as USD/JPY rebounded sharply, breaking not only above the blue medium-term support/resistance line, but also the green short-term resistance line and the May 13 high. As you see on the daily chart, we noticed a reverse head and shoulders formation. Therefore, we think that if yesterday's breakout is not invalidated, we'll see an increase even to around 103.30, where the red declining resistance line is. At this point, it's worth noting that although the CCI is overbought, the current position of the indicators still supports the bullish case.

Very short-term outlook: bullish
Short-term outlook: mixed
MT outlook: mixed
LT outlook: bearish

Trading position (short-term): In our opinion no positions are justified from the risk/reward perspective at the moment.


AUD/USD

The medium-term situation hasn't changed much as AUD/USD is still trading in the consolidation range, well below the previously-broken green resistance line, while sell signals generated by the indicators remain in place, supporting the bearish case.

Having say that, let's focus on the short-term picture.

AUD/USD
Larger Image

Looking at the daily chart, we see that the proximity to the support zone created by the May lows triggered a corrective upswing earlier today. Despite this improvement, AUD/USD still remains below the medium-term green line. In our opinion, as long as this nearest resistance line is in play, another attempt to move lower can't be ruled out - especially when we factor in the current position of the indicators, which supports currency bears. If this is the case, we will see another test of the strength of the above-mentioned support zone (marked with green).

Very short-term outlook: bearish
Short-term outlook: bearish
MT outlook: bearish
LT outlook: bearish

Trading position (short-term; our opinion): Short (the area where it was opened we marked with a red ellipse). Stop-loss order: 0. 9340.

Thank you.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
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Nadia Simmons

Nadia is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts Alerts, and Oil Investment Updates.

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons's reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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