News | ###

How to Trade the Australian Dollar after RBA Rate Decision


Jul.20.2013

Trading AUDUSD is Forex Diva's pick of Tuesday. Below is a study on the essential four wheels of forex trading before placing a market order: Technical Analysis, Fundamental Analysis, Sentimental Analysis, and Intuition.

Technical Analysis

To get a better idea of the market, it is best to zoom in different time-frames.

Monthly Chart

AUD/USD has been consolidating on a monthly basis in an overall uptrend dating back to 2008. The candles seem to be breaking out the upper level of a symmetrical triangle connecting the highs and lows of 2011 and 2012, which can be signaling a continuation pattern of the previous uptrend. A break above 1.06 can open doors to more gains to 1.10749.

Australian-Dollar-AUDUSD-Monthly-Chart

Weekly Chart

The weekly candles are in an uptrend trading above the Ichimoku cloud and seem to be aiming for the resistance level in the 1.07 area.

Australian-Dollar-AUDUSD-Weekly-Chart

Daily Chart

The Daily candles are also in an uptrend. So where could be a potential “buy” price?

For long-term investors, the Fibonacci Retracement study suggests placing a buy order at 38.2% or 50% levels at 1.02324 or 1.01301, and waiting for the prices to reach the resistance level of 1.08. The pair should be well supported at 1.0078 at the 68.1% Fib level.

A different shorter-term scenario would be placing a buy order at a previous resistance level at 1.04318, looking for the resistance to turn into support.

Australian-Dollar-AUDUSD-Daily-Chart2

4-hour Chart

On a 4-hour basis, the pair is trading well above the Ichimoku cloud. The Tenkan line crossed above the Kijun line at 1.05129 signaling more gains for Aussie Dollar.

Australian-Dollar-AUDUSD-4-Hour-Chart

Fundamental Analysis

Aussie dollar touched 4-month high as the Reserve Bank of Australian (RBA) kept interest rates unchanged and said current policy settings are appropriate. According to Bloomberg BusinessWeek, RBA Governor Glenn Stevens and his board said in a statement from Sydney the nation’s growth is close to trend. An expected decision by Australia's central bank to hold rates steady could also be behind the gains of the Australian dollar on Tuesday.

Sentimental Analysis

According to the SSI, nearly 74% of traders are short the AUD/USD. Short positions are 2.8% higher than yesterday and 3.9% weaker since last week. Open interest is 4.1% stronger than yesterday and 14.4% above its monthly average. The SSI is a contrarian indicator and signals more AUDUSD gains.

Forex Diva Intuition

Forex Diva intuition signals for a long position on AUD/USD.

 

By Kiana Danial

Back to Top

Learn How to Grow Your Wealth