All reviews

Short-term Trading Idea FX AUD/USD – Bear Speculation as Part of Two Pinbars

Trading opportunities for currency pair: two pinbars have formed. The trend on the daily is a bear one. It may be worth risking playing against the Aussie on the trend. I suggest taking 0.7090 and 0.7060 as price levels. The price could go lower, but because the situation for the key pairs is contradictory, I’m setting the target a little higher at 0.7050.

Background:

The last idea I did on AUD/USD came out on 3rd August. The rate reaching 0.7301 was supposed to leave me waiting for the Australian currency weakening to 0.6829 due to Chinese stock market uncertainty and low iron ore prices. In fact, the price level was not reached. The sellers didn’t get there by 78 points. The AUD/USD fell by 394 points and rebounded from 0.6907

Current Situation

The USD was down last week due to expectations that the US Federal Reserve wouldn’t put up the base rate for the country on 17th September.

On 15th September the AUD had support coming from the minutes of the latest RBA meeting. The minutes showed that no discussion of relaxing monetary policy took place on 1st September. Ignoring the weak state of the Australian economy, the AUD/USD renewed to 0.7279. There was a spike of volatility in the final two trading days of last week.

The US Fed left their base rate in the range of 0.00-0.25%. The regulator didn’t put rates up because it could see the risks that this would present for the global economic system, as well as those that would be created for low inflation and high volatility on the financial markets.

Investors were surprised that no one other than Jeffrey Lacker voted for an increase in the base rate. Due to this decision and J. Yellen’s speech which followed, the AUD/USD shot up to 0.7274.

The decision had a powerful effect on the rate of the USD. The Aussie was up 100 points against its US counterpart. However, in expectance of the RBA’s governor Stevens giving a speech, the rate dropped back down by those very same 100 points to 0.7170.

In the first half of Friday, the dollar’s fall continued throughout the market. The AUD/USD shunted the weekly maximum from 0.7274 to 0.7279. By the day’s end, the bears had won back pretty much all of their day’s losses.

The Aussie followed the euro and pound by dropping down after the ECB’s Benoît Cœuré and the Bank of England’s chief economist, Andrew Haldane, made speeches. Coeure announced that the ECB is ready to extend its quantitative easing measures where necessary and Haldane said that any next move by the BoE with regards to interest rates could see them lowered.

What’s of interest at the moment?

The situation is a confusing one. There’s a contradictory picture between the key pairs. This means that there’s no point in expecting a continued impulse in any direction. A flat with complex figures inside the day is on the cards.

I’ve focused my attention on two pinbars which have formed a double top on the hourly. It will start to come off after a break in 0.7175. There’s the potential of a 100-120 point fall. If the bear setup doesn’t change with any fall of the AUDUSD, movement towards 0.7010 will hasten.

The broken trend line could interfere with the workings of the pinbars. A close below 0.71 will mean a false break. For Monday I’m expecting a 0.7240 rebound. Around here you can look to sell.

Why not take advantage of the improved version of the Trader’s Calculator.

Calculate the swap and point cost >>>

Leave your comment