After Australia's Consumer Price Index disappointed the markets, AUDUSD confirms below the Ichimoku cloud, forming a Doji Candlestick pattern. Here is a quick IDDA overview to help you develop a trading strategy for our mate Down Under as traded versus Ms. USA.
1- Technical Points
Daily Time Frame: For new Invest Divas here let me explain that Technical Analysis is the first step in IDDA approach to developing a trading strategy in forex. We are going to start by looking at the daily chart today, as the AUDUSD confirms below the daily Ichimoku cloud. This is especially significant, because the pair also confirmed below the 38% Fibonacci level at 0.7526. After the confirmation however, the paired formed a Doji Candlestick pattern on Thursday. The pair opened Friday's Sydney session in the pivot zone, between 0.7450 and 0.7526.
AUDUSD Confirms Below Ichimoku Cloud, Forms Doji - Daily Chart
Other points of the Ichimoku analysis have yet to confirm.
Monthly Time Frame: A quick look at the monthly chart reveals that the pair has been ranging 0.7610 and the 0.70 level for almost two years. It has remained below the monthly Ichimoku cloud. And it could be in the middle of completing a Saucer Top chart pattern.
AUDUSD Confirms Below Ichimoku Cloud - Monthly Chart
The key long-term support is all the way down at the 0.62 level.
2- Fundamental Points
Fundamental analysis is the second step in IDDA approach to developing a trading strategy in forex. We looks at the respective currency's country's economy and political developments to help with our trading decision.
Aussie Side: The Reserve Bank of Australia (RBA) released their April's meeting minutes last week. It revealed their members aren’t as upbeat about the economy as we thought they were.
Then this week, the annual rate of inflation came in above 2% for the first time in two years. Following the business cycle, this normally would mean that the central bank should be looking to raise interest rates in order to deal with high inflation. However economists say the Reserve Bank won’t be looking to raise interest rates anytime soon.
The main reasons include the strength of Australia's labor market.
US Side: US durable goods orders rose 0.7% in March vs. 1.2% increase expected on Thursday, which is not so good for the US dollar. We also have a bunch of political volatility here, concerning Trump administration tax reforms.
The “new” tax plan looks like a tweaked version of The Donald’s original tax “plan” from last year. The combination of these put further pressure on Ms. USA (US dollar).
Coming up: US Gross Domestic Product (GDP).
Forecasts for Q1 2017’s GDP growth vary. However, most economists seem to agree that U.S. GDP growth slowed further in Q1 2017.
3- Sentiment Points
Sentimental Analysis is the third point of the IDDA when trading forex. We typically take a contrarian view to crowd sentiment.
Retail trader data shows 51.7% of traders are net-long the AUD/USD pair. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed AUDUSD trading bias.
AUDUSD Confirms Below Ichimoku - Strategy Development
As 4th point of the IDDA, you must calculate your risk tolerance before deciding on which trading strategy is suitable for your portfolio. Join us for a free MasterClass to learn more.
Disclaimer: Forex is one of the HIGHEST risk investing instruments there is. If you don't have sufficient risk tolerance to trade forex, you can try investing other online securities.
Combining technical analysis and other developments, here are Invest Diva's calculations for important approximate levels to keep an eye on:
This article was originally published on InvestDiva.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
