Forex Trading Alert: AUD/USD - Invalidation of Breakdown

By: Przemyslaw Radomski & Nadia Simmons | Wed, Jan 28, 2015
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Forex Trading Alert originally published on January, 27 2015, 11:31 AM


 

Earlier today, the U.S. Commerce Department showed that total durable goods orders dropped 3.4% last month, missing expectations for a gain of 0.5%, while core durable goods orders (without volatile transportation items) dropped by 0.8% in the previous month, disappointing forecasts for a 0.6% gain. Thanks to these numbers, AUD/USD extended gains, invalidating a breakdown below an important support level. Is it enough to trigger further rally?

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

EUR/USD
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EUR/USD
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As you see on the above charts EUR/USD extended gains, which means that what we wrote yesterday is up-to-date:

Quoting our Friday's Forex Trading Alert:

(...) EUR/USD rebounded sharply, invalidating the breakdown under the 61.8% Fibonacci retracement. (...) this is a bullish signal, which suggests higher values of the exchange rate (especially when we factor in the current position of the indictors - they are close to generating buy signals,) in the coming days. If this is the case, the initial upside target would be around 1.1443, where the 23.6% Fibonacci retracement based on the Dec 16-Jan 26 declines is.

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

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


GBP/USD

GBP/USD
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Looking at the above chart, we see that GBP/USD moved sharply higher earlier this week, which resulted in an invalidation of the breakdown below the lower border of the consolidation (marked with blue). Although this is a positive signal, we should keep in mind that the exchange rate is still trading under the previously-broken long-term green resistance line, which keeps gains in check.

Having said that, let's take a closer look at the daily chart.

GBP/USD Daily
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The first thing that catches the eye on the above chart is an invalidation of the breakdown below the medium-term green support/resistance line. Although this is a bullish signal, we saw similar price action several times in recent weeks. In all previous cases, currency bulls weren't strong enough to push the pair higher, which triggered pullbacks. Taking this fact into account, and combining it with the medium-term picture, we think that as long as the exchange rate remains under the long-term resistance line (marked on the weekly chart) and the gap between the Jan 2 low and Jan 4 high is open further rally is questionable and another pullback to the medium-term green support/resistance line in the coming days is likely.

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

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


AUD/USD

AUD/USD
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AUD/USD
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Quoting our last commentary on this currency pair:

(...) the exchange rate slipped to the previously-broken upper line of the declining trend channel (marked with brown on the daily chart). Taking this fact into account, and combining it with the current position of the indicators (they are oversold), it seems that we'll see a pause or rebound from here in the coming day(s)

On the daily chart, we see that the situation developed in line with the above-mentioned scenario and AUD/USD bounced off the previously-broken upper line of the declining trend channel. With this upward move, the exchange rate invalidated also the breakdown under the 61.8% Fibonacci retracement (seen on the weekly chart). All the above provides us with bullish implications, suggesting further improvement and an increase to around the previous Jan lows (marked with orange).

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

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

Thank you.

 


 

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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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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