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AUDUSD, AUDCAD and AUDJPY observations

It’s that time of the month again when I do my slides for the seminar ‘Lunch Time Market Primer for CFD Trading’.

This lunch time session is a monthly session where I am invited speaker for IG Singapore. This is a 1-hour lunch time session from 12.30 – 1.30pm usually in the last week of every month. At these sessions, I share observations about forex, stock indices and commodities.

This month’s session is tomorrow. Registration is free you can check it out over here.

So as I said, I am now looking through my charts for slides tomorrow and I want to share some observations over here. Partly I am trying out a new indicator which my colleague Binni Ong has developed. She has a promotion going on which you can also check out over here. Before you click, note that terms and conditions apply. But it is a good deal, you should seriously consider.

The basis for this new indicator called Autobox v2 for use on MT4 can be found here. It’s core function is to overlay price action from different time frames onto one so that when you use correctly, price direction and strong levels jump out visually. This overcomes lack of time, lack of trained discipline that many traders encounter.

I want to show you some charts over here.

 

AUDUSD is at a significant level

This is a significant level that was fought since 4 quarters, that’s a year and AUDUSD is now fighting at this level for the 5th quarter.

AUDUSD weekly chart from November 2015 - present

AUDUSD weekly chart from November 2015 – present

That’s the Autobox v2 indicator for use on MT4 you can see in this AUDUSD chart. Autobox can overlay multiple time frames but I have only 1 switched on in this chart. This is a weekly chart of AUDUSD. What Autobox is showing right now you can read in this way:

  1. Each big rectangular box based on the grey border shows 3 months of price action. So in this weekly chart from November 2015 to present, you can see 5 quarters of price action or near to 15 months.
  2. Like a candlestick, the high and low of each box is the extreme High and Low price traded in that duration.
  3. The colours operate the same as the body of a candle i.e. Open and Close.
  4. So what you see are weekly charts with 3M candles overlaid right there.

 

So question: why is AUDUSD at signficant level right now?

See label A on the second box from left. We do not know the reason why but we know that in that quarter, AUDUSD closed at 0.76556. Price did penetrate this level on numerous occasions after this but half a year later it closed at 0.76522 (see label B). how that’s just 3 pips away. This is like soccer – the goal is so big but the striker has to kick the ball and hit one of the two very slim poles at the side – I mean that’s amazing accuracy.

So is 0.7650 region a big deal? I don’t know but here it is again, AUDUSD just spent the last 3 weeks swinging up and down that level. Is AUDUSD going up or down? I leave that for you to decide but I tell you again, there must be one significant level for so much time to be wasted there.

 

AUDCAD in the same predicament

This is a chart of AUDCAD – same time frame, same way to read. You know the significant level you must see it from the Autobox indicator below. The level is not impenetrable but the way price sticks to it, market is looking at it. This chart also says that the whole move above this level late last year was a bull trap.

AUDCAD weekly chart from July 2014 - present

AUDCAD weekly chart from July 2014 – present

Enough of Autobox, here are some other charts that you should take a look.

 

AUDJPY at significant multi-year level

We have seen this kind of price action before. This is a resistance-support level/zone that has been used before.

AUDJPY weekly chart July 2006 - present

AUDJPY weekly chart July 2006 – present

 

Implication of AUDJPY direction to Asian indices

AUDJPY has a very special quality to me – it has strong positive correlations to Asian stock indices like HSI, SiMSCI and also the venerable EEM. I have brought this quality up before. Because of this special quality, turning points in AUDJPY can be an accurate prediction for turning points in Asian stock indices. It doesn’t work all the time – I have a blog post here that describes this correlation and, it also turned out that the divergence in this post did not work out – you can take a look.

The point is IF you believe that AUDJPY is indeed at a potential point and IF the strong positive correlation remains valid, then it is time the next few weeks to pay attention to local stock markets.

AUDJPY-HSI-SiMSCI correlation

AUDJPY-HSI-SiMSCI correlation | Chart: Tradingview.com

Note: On two instances, HSI flew into a passion and ran away. These were documented and due to the Shanghai-Hong Kong Connect (late 2014 – mid 2015) and Shenzhen-Hong Kong Connect (early 2016) but after both instances, the indices correlation ‘re-connected‘.

 

 

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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