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AUDUSD Opens Below Ichimoku Cloud – Aussie Overview


Nov.13.2016

AUDUSD Opens Below Ichimoku Cloud - Aussie Overview

For the first time in four months, AUDUSD opens below Ichimoku cloud on Monday's Sydney session. From a technical point of view, this is huuuuge. But do all the points of the IDDA imply a bearish scenrio? Well mates, it is time to take a closer look at Mr. Aussie and find out.

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Technical Analysis | AUDUSD Opens Below Ichimoku Cloud

The AUD/USD pair started Monday’s Sydney session by confirming below the Ichimoku cloud on the daily chart after three consecutive days of downfalls since the US election results kicked in. The pair has also broken below the upward moving channel and is currently approaching the pivot level of 0.7450, which falls on the long-term 23% Fibonacci retracement level.

AUDUSD Opens Below Ichimoku Cloud - daily chart technical analysis AUDUSD Opens Below Ichimoku Cloud - daily chart technical analysis

 

 

While we normaly consider a break below the Ichimoku cloud as a bearish signal, you must keep in mind that the cloud is pretty thin at the moment. And it is pretty flat too. In fact, the pair seems to be moving towards a range trade between the two pivot levels: 0.7690 and 0.7450.

 

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For a longer term trade, we'd need to wait for a break below the pivot or for the Chiko span to also break below the cloud.

Fundamentals | AUDUSD Opens Below Ichimoku Cloud

What went down: Mr. Aussie fell hard when Trump began to lead and risk aversion drowned the markets.

Mr. Aussie then tried to correct his downfalls when risk-taking persisted. However, he got crushed halfway through Thursday’s morning London session.

By Friday, Aussie traders were mainly backing the sentiment of the sinking commodity prices, which further weighed down Mr. Aussie, pushing him off the Ichimoku cloud on the daily chart versus Ms. USA.

What's up next: The RBA meeting minutes will be released on Tuesday November 15th, potentially creating volatility in the Aussie crosses. However don't underestimate the Trump factor in the coming days. So far market participants have been buying US dollar after The Donald showed he's walking back his campaign rhetoric, taking it as a sign that he may not be as bad for the US economy once president. But we don't know which Donald Trump will show up in the media this week. Ah, the mysteries :)

 

 

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Monday: Australia's trading buddy, China will release their retail sales results  during the Asian session. Japan’s Industrial Production will also be out during the session.

During the London session Euro-Zone Industrial Production  will be out at 10 AM GMT and we have the US 3 and 6 Month Bills Auctions at 4 :30 PM GMT. New Zealand Performance Services Index (OCT) will be out during the next day’s Asian session at 9:30 PM GMT.

Market Sentiment | AUDUSD Opens Below Ichimoku Cloud

On Friday, 61% of traders were in a bullish AUD/USD position despite the general market movement. Long positions in one of the largest FX brokers in the US were 10.6% higher than Thursday and 27.6% above levels seen last week.The fact that the majority of traders are long gives signal that the AUDUSD may continue lower. The trading crowd has grown further net-long from Thursday but unchanged since last week. The combination of current sentiment and recent changes gives a further bearish trading bias.

Trading Strategy | AUDUSD Opens Below Ichimoku Cloud

Putting the technical, fundamental and sentimental points of the IDDA approach together, the medium-term bearish strategy seems to have a reasonable risk-reward ratio.

Bearsh Scenario:

Depending on your risk tolerance, you can target 0.7450 in medium term.

Traders with higher risk tolerance could consider targeting 0.7250. However only a break below 0.7450 would confirm the extended target.

Bullish Scenario:

 

Since it looks like the pair may be in a medium term range, a break back above the Ichimoku cloud would give Aussie bulls one more chance to target 0.7690. Stay tuned for market updates and signals on our premium closed Facebook page. As always, when in doubt, book a private session with me to get your portfolio on track.

 

Here are Invest Diva's calculations for important AUD/USD approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
0.6950 0.7450 0.7830
0.7250 0.7690 0.8150

 

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 xoxo

Kiana 喜愛成
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