Wednesday, September 19, 2018

AUDUSD Gains Ground with EURO & CABLE 2

Finally, AUDUSD have started to regain its ground after most investors have swayed much stress over the retaliatory action s of China against the additional US trade tariff imposed by President Trump. The same manner that US equities have continued its pace to record levels after a minor corrective move led by the triple digit climb of the DOW above 26200. Meanwhile, this is also against a backdrop from US 10 year treasury yields that has posted above 3.00% in the US session. 


The AUDUSD price currently at 0.7230 is actually half way through its initial objective that still needs to build more momentum when it passes through above the 0.7280-0.7350. A clear objective of over 200 pips from its registered low at 0.7085.  Which was signaled from an opening gap & extension low that triggered the first round of short-covering  The technical perspective which we presented from the previous overlay chart can now justify that the bullish Gartley price pattern once completed would provide the final confirmation for a bounce. This is also where 'Patience is a virtue' when it comes to trading volatile markets.

This maybe encouraging for swing traders, on the contrary the 2nd objective may still prove to be some distance ahead. Which could easily result similarly to a 'dead cat bounce' if prices would not be accompanied with substantial volumes that would drive it past the 2nd objective. For now the current price swing higher to these levels are good. Especially, when the Australian Dollar got some additional support from their previous strong job data. There will always be a matter of trading  'CORRELATION' directly or indirectly when it comes to the financial markets.

Meanwhile, EURO got some initial relief from CABLE's previous weakness, but both currency pairs have remain firm to higher with the USD softness at this time. The way we approach its weakness for now is quite independent as it would likewise be used as a buffer strategy that once the FED raises rates the USD would be coming from its low pre-adjusted levels coming into the 4th quarter 2018. And this would be well in line with our projection for 10 year US yields to stay above 3% and relatively closer to 3.35% presumed range objective in the near-to-mid term quarter of 2019. 

2 comments:

  1. The USD is gradually building up some distance from its 50% Fibonacci high at 96.98 and is currently at 93.85 low in early US session. Its weakness has been initially anticipated from a technical basis. And not surprisingly the influence of the USD weakness comes from external fundamentals.

    After a tight range consolidation, the USD index decline came from the GBP & New Zealand Dollars move, were BREXIT Talks and better than expected economic data have given CABLE a lift near the 1.3300 session high and the KIWI at 0.6673 and the AUDUSD at 0.7285 respectively.

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  2. From its recent correction, commodity currencies such as the AUDUSD have gotten some lift from Shang-Hai stocks as MSCI is considering giving additional weightings on Chinese A shares. Aussie is back on track at 0.7260 with a session high at 0.7283 in Asian session.

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