Forex Trading Alert: Dark Clouds Over AUD/USD

By: Nadia Simmons & Przemyslaw Radomski | Fri, Aug 8, 2014
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Forex Trading Alert originally published on Aug 7, 2014, 2:13 PM


 

The Australian dollar declined to a two-month low against its U.S. counterpart after official data showed that the number of employed people in Australia fell by 300 in the previous month, missing expectations for an increase of 12,000. Additionally, Australia's unemployment rate rose to 6.4% last month, from 6.0% in June. Later in the day, AUD/USD extended losses after the Labor Department said in its report that initial claims for jobless benefits in the week ending Aug. 2 fell by 14,000, beating analysts' expectations for a 2,000 increase. Because of these numbers, the pair declined to the long-term support line. Will it be strong enough to stop currency bears' charge?

In our opinion, the following forex trading positions are justified - summary:

EUR/USD: none
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none


EUR/USD

The medium-term outlook hasn't changed much as EUR/USD still remains in the green support zone. Today, we'll focus on the very short-term changes.

EUR/USD Daily Chart
Larger Image

Looking at the above chart, we see that although EUR/USD rebounded slightly yesteday, the pair reversed and declined to the lower border of the green support zone. As you see on the above chart, this area still holds and the exchange rate is trading above the 127.2% Fibonacci extension based on the entire Feb-May rally and the medium-term green support line. Consequently, we believe that as long as there is no breakdown below these levels, another sizable downward move is not likely to be seen. Please note that if this area holds, we'll see another corrective upswing in the near future.

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

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


USD/CHF

USD/CHF Daily Chart
Larger Image

In our last commentary on this currency pair, we wrote:

(...) the pair reached the 141.4% Fibonacci extension and approached the upper line of the rising trend channel once again. If history from the previous week repeats itself, we'll see a pullback from here in the coming day (or days). Please note that this scenario is currently reinforced by the position of the RSI, which remains above the key level of 70 (...)

Looking at the above chart, we see that although USD/CHF corrected gains yesterday, the pair is still trading in a narrow range slightly below the resistance zone. In our opinion as long as there is no breakout above it or breakdown below the long-term orange support line another sizable move is not likely to be seen. Nevertheless, we should keep in mind that the RSI and CCI generated sell signals (there are also negative divergences between them and the exchange rate), which suggest that a pause or correction is just around the corner.

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

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


AUD/USD

AUD/USD Weekly Chart
Larger Image

Although the medium-term picture has deteriorated as AUD/USD dropped to the long-term green line, this strong support still keeps further declines in check. Terefore, we still believe that as long as there is no breakdown below this key support, another sizable downward move is not likely to be seen.

Having say that, let's take a closer look at the very short-term changes.

AUD/USD Daily Chart
Larger Image

From this perspective, we see that although AUD/USD broke above the upper line of the consolidation, the 50% Fibonacci retracement successfully stopped further improvement. As a result, the pair reversed, invalidating earlier breakout, which was a strong bearish signal that triggered a sharp decline and a drop to slightly below the medium-term red support line. So far, this key support still holds. If it withstand the selling pressure in the following hours, we'll see a rebound from here and another attempt to break above the 50% Fibonacci retracement. However, if this important line is broken (and the pair closes the day below it), it will be a strong negative signal, which could trigger a decline to the downside targets that we discussed yesterday:

(...) we may see a decline to 0.9213 or even to the bottom of the correction that we saw in May (around 0.9207-0.9210).

Very short-term outlook: mixed
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.

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.

Copyright © 2013-2014 Sunshine Profits

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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