Forex Trading Alert: AUD/USD - Trend Reversal or Just a Bigger Pullback?

By: Nadia Simmons & Przemyslaw Radomski | Thu, Apr 28, 2016
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Forex Trading Alert originally published on Apr 27, 2016, 4:22 AM


 

Earlier today, the Australian Bureau of Statistics showed that the consumer price index dropped by 0.2% in the first quarter, missing analysts' forecast. Additionally, consumer prices (year-on-year) rose by 1.3% in the first three months of the year also disappointing expectations. Thanks to these numbers, the Australian dollar declined sharply against the greenback, which pushed AUD/USD under previously-broken important line. Is it enough to trigger further deterioration in the coming days?

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

EUR/USD: short (stop-loss order at 1.1512; initial downside target at 1.0572)
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none


EUR/USD

EUR/USD Weekly Chart
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EUR/USD Daily Chart
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Although EUR/USD gave up some gains yesterday, currency bulls didn't give up and the pair rebounded earlier today. Taking this fact and buy signals into account, we think that what we wrote in our previous alert is up-to-date:

(...) the exchange rate may extend gains and climb to the upper border of the purple declining trend channel in the coming days. Nevertheless, even if we see such price action, sell signals generated by the weekly indicators suggest that further deterioration is just a matter of time.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.1512 and the initial downside target at 1.0572) are justified from the risk/reward perspective.


USD/CHF

USD/CHF Weekly Chart
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USD/CHF Daily Chart
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On the daily chart, we see that USD/CHF extended losses earlier today, which in combination with the current position of the indicators (sell signals remain in play) suggests that lower values of the exchange rate are still very likely. If this is the case and the pair declines further, the initial downside target would be around 0.9670, where the green support line (marked on the weekly chart) currently is.

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

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


AUD/USD

AUD/USD Weekly Chart
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Looking at the weekly chart, we see that AUD/USD extended losses this week, which resulted in a drop not only below previous highs, but also under the upper border of the rising purple trend channel. Although this is a negative signal, it would change into bearish only if the exchange rate closes the week below this important line.

Will we see such price action? Let's examine the daily chart and look for more clues about future moves.

AUD/USD Daily Chart
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On Monday, we wrote the following:

(...) the pair dropped under the lower border of the consolidation, which in combination with sell signals generated by the indicators suggests further deterioration. If this is the case, the initial downside target would be around 0.7597, where the 23.6% Fibonacci retracement (based on the entire Jan-Apr rally) is.

From today's point of view, we see that the situation developed in line with the above scenario and AUD/USD declined sharply earlier today. With this move, the pair approached our downside target, however, there are no buy signals that could encourage currency bulls to act, which suggests that we may see a test of the blue support line based on the previous lows in the coming day(s).

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

Trading position (short-term; 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.

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Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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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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