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Tag: AUDUSD

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Extreme Positions

Check out the positioning in the forex market as we were headed into today’s FOMC meeting. Though Walle Smith points out here the crowding into GBP shorts, look at the USD positioning last week as reported by the CFTC. In light of today’s 25bps rate cut, 2 dissenting FOMC members who wanted to hold on interest rates, and verbal confirmation during the press conference from Federal Reserve Governor Powell that there will be no cycle of interest rate cuts, the positioning in the market is not at all stretched. With all of that just happening, there was still room in the long USD trade. Which is very interesting when you look at the trends against the other major world currencies. The market has significant room before it even is considered crowded with long USD positions.

My take is that the Fed has pretty much given markets the green light with no real reason to sell the USD. And it is likely that the USD continues to move higher still.

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ON THE AIR with FUTURES with Ben Lichtenstein

I kicked off the Fourth of July holiday on Wednesday, July 3rd with a special guest appearance on the TDA Network show, FUTURES with Ben Lichtenstein. It is fun talking to Ben about currency markets because he comes at it from a purely futures lens and I from a purely forex lens. For example, when we discuss the Australian dollar, he’ll say $6A_F and I’m actually referring to the $GBPAUD. I just love this juxtaposition and the insights we discuss as a result.

The central banks were front and center throughout my segment. The RBA might be done with interest rate hikes while the Federal Reserve probably cuts interest rates this month after all (see the Bloomberg story linked below) and the BoE figures out how to maneuver the latest Brexit drama. What does that mean for the summer forex market?

Watch the show below!

Lydia appears on TD Ameritrade Network
Click the image to watch

Related reads: Aussie About To Appreciate Against The US Dollar (FaithMightFX)
The Myth of the Tight U.S. Labor Market (Bloomberg)

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Aussie About To Appreciate Against The US Dollar


From mid-April, the USD has been gaining against the AUD. The $AUDUSD bearish turn made price reach 0.68636, the lowest since the early days of trading in 2019. Before the bearish turn, the volatility of the $AUDUSD pair had been low, causing price to be in a range. Price is currently in consolidation after the downtrend, providing trading chances for the bulls.

AUDUSD Daily Chart

The downward movement has made RSI reach an oversold position. The Ichimoku cloud still shows a bearish future. $AUDUSD might be gaining momentum for a bullish takeover after price broke out from the trendlines last week. As the $AUDUSD bulls are beginning to get into the market, efforts could make price return to the resistance level of 0.71769 from its current 0.69212. As we expect a major bullish trend, a reversal might occur after price touches the resistance level.

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ON THE AIR with Futures with Ben Lichenstein

I kicked off the new trading week this Monday morning on the TD Ameritrade Network talking as one of the guests on the Futures with Ben Lichenstein show. Ben and I discussed the full gamut of fundamentals in the forex market for the Australian dollar, the euro, the Japanese yen, the Great British pound and the U.S. dollar.

Enjoy the interview below!

Lydia on TDA Network
Click image to watch
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AUDUSD To Gain More Pips Despite A Long Term Downtrend

It has been a long term downtrend for the $AUDUSD since the beginning of the year. The downtrend is characterized with several lower highs and lower lows. In the last two months, the upward and downward movement of $AUDUSD have been between 300 pips. Price movement tends downwards maintaining the lower part of the Bollinger bands. The USD without argument this year has gained so much against the AUD.

The RSI has not touched the overbought position since January. Since then, price keeps moving downward without ever reaching the overbought or oversold regions. A breakout occurred off the trendlines and price is yet to touch the Bollinger band middle line. It is about 200 pips reaching this point. The future of Ichimoku shows a long downtrend and no trace of a reversal. The last time $AUDUSD maintained a bullish trend was between December 2017 and January 2018. Ever since a reversal occurred, price of $AUDUSD has been on a downtrend.

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Australian Dollar Depreciates Further Against The U.S. Dollar

Ever since January 2018, the Australian Dollar has been losing to the U.S. Dollar. This has resulted to several lower highs and lower lows. The last time the $AUD got to this point was in November 2016. And it was a major support level. In between these years, the momentum of price was not one-sided. Now, as the $USD gains from the $AUD, there is no trace of price been oversold. The downward movement has attracted about 1000 pips since January up till now. The $USD might still gain at least 100pips.

No doubt, the $USD has gained so much in 2018 against counter currencies. Price movement has only maintained the lower section of the band for a long time and not yet oversold on the RSI. Recently, there was a breakout downward of the support level. A reversal towards the uptrend started also when price touched the lower band line. This could be a temporary reversal because several dojis are formed. There are few times price tried to move upwards to the higher band, it retraces back to the lower section indicating a larger volume of sales going on in favour of the $USD. As it looks, the $AUDUSD might continue the downward movement.

 

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MARKET OUTLOOK ON AUD/USD

The Australian dollar had a resistance level at 0.7370. Ever since it touched this point, it has been on a downtrend. Could it be developing a new support level at 0.7288. On Friday, there will be high impact news to be released on the USD but for now this pair is in a range form. The Aussie has been losing to the dollar since Tuesday and might continue if the next news comes out in favour of the US dollar.

The AUD/USD with the RSI has been on the sell region for sometime but yet to be oversold  i.e. yet to get below 30%. The ichimoku kinko hyo (senkon span) has been in the sell region, which might still retain its stand.

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What I Wish I Said

I was honored today to be on @spz_trades’s last show on BFTD.tv with @NicTrades. @NicTrades is a superwoman who chatted markets in the middle of a power outage. She rocks. Some of her key observations for 2014 that I took away:

  • $AUDUSD to 0.9000 off the double bottom
  • $USDJPY to 112
  • USD lower and USD pairs higher
  • $EURUSD to 1.43
  • Correction in $SPX, $DAX and $FTSE
  • Stocks will have to rally on their own merit, not QE

I was clearly the student in the room and now in hindsight there are a number of thing I WISH I could say now. SMH. Face plant. So I’ll say them here.

  • I do see $EURGBP higher to 0.8600. I also still see heading lower in 2014 to 0.8000. It might happen way sooner than I imagined if current price action is any indication.
  • $GBPAUD is due a correction lower. Much lower. But if it were to correct to 1.7670 the 50% Fibonacci level, hold, and rip to new highs at 2.10, it would be the trade of the year.
  • Other great follows right now on Twitter for new traders that I didn’t mention: my traders list

I love that this blog gives me the opportunity to reflect on myself and remain true to who I am. I don’t know if it was nerves (Nic is a rock star!) or because I had company the night before, but I don’t feel like I came off myself today. Hopefully, you all can enjoy listening in on this chat about markets and trading for 2014.

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Central Bank Tailspin

Like I said this morning, I don’t trade with central banks. When a central bank is actively manipulating their currency, that is a currency that I will not trade. As of last week, the Australian dollar was officially listed on my no-trade list.

And you can see from price action. Of the 4 GBP pairs I actively trade, $GBPAUD is the only one that has remained buoyant. It has even hit the long-term bull target I pointed out weeks ago at 1.8250. Last week, RBA Governor Stevens openly admitted to intervening in the forex markets to deliberately weaken the AUD. He even went as far as to tell markets that his preferred level in $AUDUSD is 0.85. That’s 500 pips away so you can imagine what has to happen to the AUD from current levels. Though technicals had pointed to a significant dip in the $GBPAUD below the big 1.80 psychological level, I suspect that the $GBPAUD remains bullish as dips will be aggressively bought in anticipation of RBA intervention.

Despite the tinkering in the AUD markets, GBP remains on the back foot as this new trading week opens. Even as a general GBP bull, I still remain bearish sterling near term as I believe these monster rallies are also deserving of some monster corrections. After last week’s action, the weekly chart is now my chart in play.

Mentioned above: BTFDtv.com Fx Update Desk interview

$GBPUSD

$gbpusd_12_17_13_5_38_AM

$EURGBP

EURGBP WEEKLY CHART

$GBPNZD

GBPNZD WEEKLY CHART

$GBPAUD

GBPAUD WEEKLY CHART

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