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FOREX Chart Of The Day: Is The AUDUSD Rally Over

#AUDUSD has been in an uptrend since April last year, but the question is will the rally end?

We take a look at the key levels and what could potentially play out for the major currency pair.

Watch the video to learn more…

Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.

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In this video, we’re going to look at AUD/USD as we could potentially see one last push to the upside. I know that’s going to sound against what we’re looking at the moment, we’re pretty much looking for US Dollar buying opportunities. The problem is, at the moment, the US Dollar is very much like a mixed bag. It’s struggling to make any higher highs, especially on the US Dollar Index and this is what’s causing a few pullbacks in the major currency pairs. We haven’t seen any full bearishness coming into the AU Dollar.

Now, I did think we were going to see that because If I go to Dow and I bring in a new chart –let me go and bring in my template. Now, if we take a bigger picture look at the Dow, look at the daily timeframe. Yesterday, we had a huge down day. Many people would look at that and probably think – or a lot of retail traders, especially – will look at this and go down the day, stock market’s falling, this will fall even further, and we’re going to see loads of downside to the market. That’s not necessarily what happens. Usually, when we see large moves to the downside, they get bought-up pretty quickly on the stock markets. I’m looking at this move; there was a nice level, here, on the Dow, and I was looking for the price to trade back from this area back to the upside.

You have a switch of what we call ‘risk-on risk-off’ in the market. We have done a video on this before. If you drop a comment in the comments section below, I will forward that video to you. Essentially, risk-on risk-off is usually shown in the stock markets. If the stock market is in an uptrend, we are normally in risk-on mode. This usually sees currencies such as the AU Dollar, the Kiwi, and CA Dollar gain strength. If we’re in risk-off mode, these markets typically fall. We usually see the US Dollar strength and JP Yen strength.

But, when we see the risk-on effects, we see the opposite, we see the US Dollar fall, the JP Yen fall, and the Aussie, Kiwi, and CAD gain value. With that in mind, we can check out AUD/USD. It’s very good at adapting to risk and we can see, here, that the price is starting to find a little bit of support.

Now, where is it finding support? If I go into the daily timeframe, we can see that we’re in, again, an uptrend market. We know we’re in a bit of a retracement phase because of what’s happening on that weekly timeframe: we’re getting those bearish candlesticks, and we are technically retracing at this moment. However, the daily has come into this area where the market recently found resistance and support. Now, we’re getting a second test of this support, and we’re seeing that buyers are very much active at this moment.

For me, if the stocks market is going to continue to rally, then risk currencies should rally. That means that we could be seeing another opportunity to buy the US Dollar, targetting the high here. We need to see how this closes because if the price closes below, this level still has a long time goi in the session. Yet, things could change and we could break the lower lows. And if we break below the lows, then I’d wait for a secondary close below to confirm that we have the lower low and lower close. Let’s say it looks like this at the end of the day: full bearish candlestick, we get two bearish lower lows and low closes. Then, our bias is different: we’re probably looking for shorts around this level because that would have created a lower low, signifying a change in trend forming.

However, we don’t have a change in trend yet. The change in trend would come in like what I’ve said. However, the price keeps coming to this low at the moment and keeps bouncing. Bounce, bounce, and we’re getting a large bullish pin candle at the moment. If we were to stay like this, this could be an opportunity to look to buy the market up into these recent swing highs, up here, in line with that stock market going long.

And as I said, the US Dollar is neither strong nor weak at the moment. It’s going back and forth. We’re looking for some further downside on other pairs, such as EUR, which we got short quite nicely. And Kiwi is pulling back into a level of resistance as well. But Aussie, here, is looking like it’s staying a little bit stronger at the moment.

I’m looking at the four-hour timeframe, wherein I typically like to do is to see if the daily is bullish. For example, we said that with the daily bullish candle, I like to wait for a change in trend before getting involved. So, it adds another level of bias to the market and usually, a higher probability opportunity.

If the price were to drop here and we saw it bounce around and then rally, this would be a perfect area to look for further longs. But at the end of the day, a nice pin candle could be some buyers left in this market.

Thanks for watching this video update. If you have any comments or questions, please feel free to drop them below. I’ll get back to you as soon as I can, and I’ll speak to you soon.

We hope our forex chart of the day analysis helps you in your trades. Practice trading the AUD/USD pair with up to $50,000 free funding when you sign up for a free demo account at Blueberry Markets

Blueberry Markets is not a financial adviser, and does not issue advice, recommendations, or opinion in relation to acquiring, holding or disposing of a margined transaction. We provide general advice only and accordingly you should consider how appropriate the advice (if any) is to your objectives, financial situation and needs before acting on the advice.