We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • My weekend trading video: 'S&P 500 Rises on Trump China Presser, #NFPs and Rate Decisions Ahead' https://www.dailyfx.com/forex/video/daily_news_report/2020/05/30/SP-500-Rises-on-Trump-China-Presser-NFPs-and-Rate-Decisions-Ahead.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/ZvoGoibzj1
  • Hopes are high for deeper European economic integration as the continent battles back from the coronavirus slowdowns – but will it hold? What impact can this have on #Euro? Find out from @JStanleyFX here: https://t.co/b9ZWRd4cTr https://t.co/gngm5tKqjz
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data.Get your market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/iL7xlHLBiF
  • #Gold has a short-term bullish set-up that may play nicely with USD weakening. The longer and shorter-term path of least resistance remains higher. Get your $XAUUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/B4MVrg8f6i
  • The AUD may suffer as relations between Australia and China deteriorate amid dwindling growth prospects. Euro traders will be closely watching progress in talks about a €500b recovery fund proposal. Get your market update from @ZabelinDimitri here: https://t.co/LkEFJViPWY https://t.co/Fo1wlWyz8r
  • The US Dollar is attempting to find direction against the Singapore Dollar, Philippine Peso and Indonesian Rupiah as technical levels hold. The Malaysian Ringgit eyes a key trend line. Get your #ASEAN currencies market update from @ddubrovskyFX here:https://t.co/lcSLkOnJgQ https://t.co/4ofHIpGiTm
  • Trump says he needs to see a strong study on China's actions surrounding virus - BBG
  • The Dollar Index has broken below a multi-week consolidation / the May opening-range lows and keeps the focus lower heading into June. Get your $USD technical analysis from @MBForex here: https://t.co/hkm3nIoyeh https://t.co/SzMeNFyPyp
  • RT @fxmacro: COVIDView: A Weekly Surveillance Summary of U.S. COVID-19 Activity | CDC https://t.co/Gtr0sUoyft
  • RT @globaltimesnews: The #US, rather than #China, will pay a hefty price for imposing sanctions against #HK in the latest broadsides aimed…
Bullish AUD/USD As Ichimoku Support Holds & Sentiment Deepens

Bullish AUD/USD As Ichimoku Support Holds & Sentiment Deepens

2016-11-07 19:50:00
Tyler Yell, CMT, Currency Strategist
Share:

Bias: Bullish Commodity FX As Ichimoku Support Holds & Sentiment Deepens

Point to Establish Long Exposure: Above Triangle Resistance at 0.7730

Spot: 0.7714

Target 1: 0.7830 2016 High in April

Target 2: 0.79122 Fibonacci Extension on Breakout From Triangle

Invalidation Level: Close below 0.7595/83 Oct. 25 Low / 100-DMA

Highlights:

Fundamental & Technical Focus:

There has been a rising in the metals market that has directly benefited the Australian Dollar and could continue. The price of Copper recently touched seven-month highs on the pick-up in Chinese Economic data as well as markets looking past the election.

Commodity currencies like the Australian and New Zealand Dollar have been outright impressive over the last five weeks. Recently, the Reserve Bank of Australia continues to voice a hold preference whereas other commodity-dependent central banks to hit inflation targets like New Zealand and Canada has begun introducing the idea of more easing. This divergence gave both the Australian & the New Zealand Dollar reasons to go bid.

Australia recently had stronger than expected retail sales, but most of the focus in early November remains on the election. Traders looking past the election in the U.S. appear to be anticipating further upside in AUD & NZD vs. weaker currencies.

Bullish AUD/USD As Ichimoku Support Holds & Sentiment Deepens

Adapted From, November Forex Seasonality Favors Return of US Dollar Strength

The seasonality argument can also be helpful this time of year. In short, the seasonal tendencies are for riskier assets to rally into year-end. The Australian Dollar provides a rather supportive reading in election years looking back to 1996. While a Fed hike is anticipated at the December FOMC meeting, it also looks to be fully priced in, which may provide more resistance than support on AUD/USD.

Chart:

Bullish AUD/USD As Ichimoku Support Holds & Sentiment Deepens

Created by Tyler Yell, CMT

Technically, a few points stand out to me, least of which is that price, and momentum (green line) has remained above the Ichimoku Cloud since June. Additionally, an Andrews Pitchfork price channel (red) shows the median line acting as a backbone on the move higher. Should the cloud continue to hold as support, a move toward the target is increasingly likely.

In addition to Andrew’s Pitchfork & Ichimoku cloud providing support, the 100-day moving average is providing support and was a launching pad for the current move at 0.7583. Now, smaller moving averages can be used to buy pullbacks such as the 34, 21, or 13-dma.

An important note is that the Australian dollar and all other currencies in the G10 are likely to experience heightened volatility this week. As Christopher Vecchio recently pointed out IN, November Surprise? Markets Places Bets on US Election Outcome. This volatility can and likely will spill over to other currencies. In the current context, it appears any short-term weakness could be an opportunity to enter at a better risk: reward ratio especially if the VIX continues to fall.

Hedge Funds Appear To Be Building Bullish AUD Bets Per CFTC

Bullish AUD/USD As Ichimoku Support Holds & Sentiment Deepens

From Jamie Saettele’s, COT-Large Speculative Long Position before U.S. Election

The bottom window on the chart above shows the building Bullish Bias of institutions at a time where the chart may be showing a long-term bottom. This window is called the CoT Index, which is the difference between net speculative positioning and net commercial positioning measured.

We could be on the verge of new multi-year highs in AUD futures that could continue to support a strong move higher in AUD/USD if achieved.

AUD/USD – Holding Above Ichimoku Cloud And 0.77

2nd resistance: .78303 2016 Highs In April

1st resistance: 0.7749 Aug. 16 high

Spot: 0.7715

1st support: 0.7629 21-DMA

2nd support: 0.7583 100-DMA

Sentiment (per our Speculative Sentiment Index):

Bullish AUD/USD As Ichimoku Support Holds & Sentiment Deepens

The ratio of long to short positions in the AUDUSD stands at -1.42 as 41% of traders are long. Yesterday the ratio was -1.27; 44% of open positions were long. Long positions are 1.5% lower than yesterday and 28.5% below levels seen last week. Short positions are 10.1% higher than yesterday and 27.0% above levels seen last week. Open interest is 5.0% higher than yesterday and 1.7% below its monthly average.

We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives a signal that the AUDUSD may continue higher. The trading crowd has grown further net-short from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

The Trade:

I am looking to buy AUD against weaker currencies like JPY, CAD, and potentially USD if data this week continues to disappoint. I would like to buy closer to support as opposed to on an extending move higher. Upon this buyable pullback, a stop below the October 25 low of 0.75575 would be the first risk management level. The target is at 0.7830, which would take us to new 2016 highs. This target aligns with a favorable risk: reward ratio that our Traits of Successful Traders report found to be one of the best things a trader can do to ensure long-term sustainability in your trading.

Happy Trading!

Tyler Yell, CMT

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.