AUD/USD Trades to Weekly Highs
- The AUD/USD is set to close higher for fourth consecutive session
- Short Term Momentum Points Lower, Historical Distributions Set Higher
- Bullish Distributions Begin at .7481, Signaling a Resumption of the Trend
The AUD/USD is currently trading to new weekly highs, and is poised to close higher for the fourth consecutive session. This initial surge in price higher was predicated on a technical move through .7253, which is represented in the graph below using the 200 day moving. Normally a move above the 200-day MVA suggests the beginnings of a bullish trend. Knowing this, day traders may then elect to move in to smaller time frames and look for signs of the trend continuing.
AUD/USD Daily Chart with 200MVA
(Created using Grid Sight Index)
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Displayed in the graph below, we can now see the AUD/USD turning off of its highs. This short-term downtrend has developed with price action printing a string of 5minute candles moving towards lower lows. However, despite this retracement, the Grid Sight Index has reviewed 31,673,450 matching pricing points and identified that prices have advanced a minimum of 13 pips in 50% of the 110 matching events. If price reaches this first bullish distribution point at .7481, it would suggest this move lower was a retracement in a broader uptrend. A move over this value would also indicate fresh bullish momentum for the pair. In this bullish scenario, traders may look for prices to test other bullish distributions. This includes the 20% distribution, which resides at .7493.
Traders should watch for a reversal of the markets current trend. Out of the 110 matching events provided by GSI, the market declined 12 pips in 32% of these instances. It should be noted that the first bearish distribution is located at a price of .7456. If the AUD/USD declines to this point, it opens the pair up for a further retracement. In this scenario, traders should next watch for the final bearish distribution at .7420. A move to this point would represent a 48-pip decline and only occurred in 5% of the 110 matching events.
What is GSI?
Grid Sight Index is a powerful big data indicator that can help you determine whether short-term trends will continue or reverse. GSI takes a snapshot of current price action and uses that to find similar events by studying millions of historical data points. Then it studies those events to show you how often the trend continued or reversed in the past.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.