AUDUSD Neutral but possibly Bullish
Despite negative sentiment and the USA's threat of further import tariffs on China which impacts the AUD, technical analysis suggests a Neutral to Long pattern.
Price action on the 1D chart appears to be respecting the Broadening Bottom pattern and at close of market on 8th August 2019, at the support trend line (blue line) of the 4th touch in the channel. This coincides with a CCI in the oversold region, Class A Bullish Divergence and a CCI bullish cross (CCI crossing the 10-day EMA signal). This also coincides with an increasing Money Flow Ratio (MFR) with the 14-day EMA MFR crossing the 50-day EMA MFR, suggesting positive money flow into the AUD.
Typically, the Broadening Bottom pattern results in an upward breakout around 55-60% of the time with the 5th pulse having the largest price action. But if only a partial rise can be achieved, say to the 0.382 or 0.5 fib, then chances are the price action will break support trend and fall to the longer-term demand zone around 0.64 which typically results in this pattern around 70% of the time.
Targets would be usual Fibonacci levels of 0.382 and 0.5, with a close of long position around the previous Last Low Pre-Break (LLPB) just below the supply zone (red shading).
Price action on the 1D chart appears to be respecting the Broadening Bottom pattern and at close of market on 8th August 2019, at the support trend line (blue line) of the 4th touch in the channel. This coincides with a CCI in the oversold region, Class A Bullish Divergence and a CCI bullish cross (CCI crossing the 10-day EMA signal). This also coincides with an increasing Money Flow Ratio (MFR) with the 14-day EMA MFR crossing the 50-day EMA MFR, suggesting positive money flow into the AUD.
Typically, the Broadening Bottom pattern results in an upward breakout around 55-60% of the time with the 5th pulse having the largest price action. But if only a partial rise can be achieved, say to the 0.382 or 0.5 fib, then chances are the price action will break support trend and fall to the longer-term demand zone around 0.64 which typically results in this pattern around 70% of the time.
Targets would be usual Fibonacci levels of 0.382 and 0.5, with a close of long position around the previous Last Low Pre-Break (LLPB) just below the supply zone (red shading).
Comment:
Still looking bullish with CCI above the 10-day EMA signal and increasing. Vix indicated quite a strong bottom signal with 4 consecutive daily VIX signals >4 and max of 5.6. Money Flow Ratio is still greater than the corresponding 14-day EMA MFR and 50-day EMA MFR, with bullish 14-day EMA > 50-day EMA. The daily MFR is decreasing however and approaching the EMAs. If the 14-day EMA falls < the 50-day EMA, and CCI follows suit, there's a good possibility that the price action will break support trend and fall to the longer-term demand zone around 0.64 which, as previously mentioned, in the Broadening Bottom pattern typically occurs around 70% of the time after a failed rally.
Comment:
The last 4-6 days have seen support hold at around 0.675 and heralds the shift from Class A bullish divergence to Class B bullish divergence. CCI is continuing to increase and remains above the 10-day EMA signal. Money Flow Ratio continues to increase with an increased separation between the 14-day EMA and 50-day EMA suggesting money is flowing into the Aussie. Given the increasing indicators of CCI and MFR over the past 7 days suggesting upside momentum, but only sideways price action, I am developing the opinion that perhaps we are in an accumulation zone which, if is the case, could be quite a bullish indicator leading to a potential break out to the upside.
This of course could all come undone by further negative sentiment or another ill-timed tweet by Trump relating to China-USA trade war.
This of course could all come undone by further negative sentiment or another ill-timed tweet by Trump relating to China-USA trade war.