3 charts to note if you play AUDUSD long

Between an early bull and a late one going AUDUSD long, the proposition is very different. AUDUSD is strong but approaching resistance levels. There are 3 charts here you need to look.

AUDUSD is strong compared to other dollar pairs like EURUSD, GBPUSD, NZDUSD. As a short term indication, it is trading above June and July highs at the moment. In fact going long AUDUSD is also sweet for long term investors because of the positive swap. In addition, RBA’s interest rate decision was last Tuesday and the next one is 06 September meaning that at least rate-driven volatility is now behind. RBNZ’s rate decision is tomorrow morning so buyers will have to tighten seat belt for potential hair-raising moves.

AUDUSD daily chart Feb 2016 - present

AUDUSD daily chart Feb 2016 – present

Early movers for AUDUSD longs can seat back enjoy the rally but for those who have missed the bus, going in right now is a different proposition altogether. Take note of features in these 3 charts.

 

Slide #1 – AUDUSD has not closed a week above 0.77177 since 59 weeks.

AUDUSD weekly chart April 2015 - present

AUDUSD weekly chart April 2015 – present

 

Slide #2 – AUDUSD has not closed a month above 0.76556 since 13 months.

August is still young there are 21 more days to go. This is not a concern for scalpers or day traders but is important to anyone who intends to carry over a position. If AUDUSD closes at month end below 0.76556, any movement above this level is merely a false break.

AUDUSD monthly chart November 2013 - present

AUDUSD monthly chart November 2013 – present

 

Slide #3 – Retracing into overhead resistance?

Finally there are at least two features to note in this chart. 1. There is a trend line overhead (red) and price is getting awfully close. Resistance or not we will have to observe. 2) Without a big reversal pattern such as a W or VVV, AUDUSD strengthening looks suspiciously like a retracement action only in the channel’s context. In fact even the length of the red arrow and angle is exact.

AUDUSD monthly chart Jan 2011 - present

A person asked ‘did you copy and paste the arrow?’ Yes.

If this is a retracement and not a bullish reversal, does the arrow indicate that amount of retracement as well as duration is almost complete?

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.   Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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