AUD Update

Following on from my previous post The Aussie Dollar: On Cliff’s Edge here’s an update of what some of the weekly charts are looking like.

Firstly, here’s a chart I’ve been sharing on twitter this week, AUDUSD monthly.

Apart from GFC we haven’t seen much follow through after big red monthly candles.
“This time it’s different”. Interest rates, the economy, China, etc. Maybe. But I’m trading the probabilities here and fully expecting a shorter term bounce (as supported by weekly chart below).
Keep in mind I’m only looking at the probability for the month of June here and not looking beyond. The large descending triangle suggests longer term weakness and an eventual 80c, but of course I’m getting way ahead of myself and beyond my trading timeframe.

Below is AUDUSD weekly with parallel lines that I’ve had on there for a couple of years now so I trust their reliability.

The zoomed weekly below clearly shows the bullish engulfing reversal candle pattern and previous weekly reversal patterns. A 50% retrace (much less than previous reversals) would take us back to 9954.

Other AUD crosses are showing similar reversal patterns. AUDJPY weekly below shows the reversal “hammer” candle at a long term support/resistance line.

AUDCHF weekly is another interesting chart. First there is a horizontal level that has been KEY many time previously. Being across several years now it’s difficult to give a precise level but the 8850-8900 area is a broad guide to where it should be. The latest candle is a “hammer” reversal bouncing off the pitchfork support tine (which I have re-aligned, thanks to @totterdell91)

EURAUD weekly below shows similar reversal candles at a key weekly level.

GBPAUD weekly below shows the same. But keep in mind it did make a new 3yr high.

AUDCAD weekly is similar in that it has a reversal candle albeit a weak one. You would have to separately judge the strength of CAD as well and from what I see on USDCAD, the loonie looks stronger than the aussie.

On my previous post I had included the RSI indicator on most charts to support my views. I’ve omitted it this time as I firmly believe price and price action comes first. And the action loudly speaks near term reversal to me and more upside to come.

(One chart that is probably the most important of all the charts in the world right now is the NIKKEI. If 12400 area fails then ignore all the above. :))

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The Aussie Dollar: On Cliff’s Edge

A huge move by the Aussie Dollar these past two weeks has prompted a closer look at longer term charts of all the AUD crosses. Comments on the charts.

[Click on image to open in new tab then click on 1529×917 to open in full size. Used to go to full size straight away but don’t know why now]

As you can see most of the charts agree that AUD is on the edge of the cliff.

JPY Pairs

Hourly charts of AUD/JPY, EUR/JPY, GBP/JPY, CAD/JPY, USD/JPY. No commentary.

USD/JPY 27/12/2012

With the target from our analysis 4 weeks ago hit, it’s time to look forward again. It’s been a huge move. Although we don’t know what will happen next we can think in terms of probabilities. USD/JPY is overbought on daily and weekly charts. We can expect some kind of relief at some point and now is as good a time as any. It doesn’t have to, it doesn’t need to, it could break out higher as I click on “publish”, but then we’d never trade. As the daily chart below shows, a backtest of the aqua line at a previous resistance point near 82.85 would keep the up move healthy and remain bullish.

But what if it wants to go higher? It’s tricky looking up higher as there is not much to the left of current price so I’ve opted for the Fibonacci expansion to find potential targets. Assuming the current move is 100% complete then higher targets can be found at 91.00 and then near 94.50 as per chart below. But only if the current move is complete. Any move to new highs in the next day or two would invalidate all of the above requiring a re-drawing of the charts. And if it marches on relentlessly then there’s not much in the way to 94.50.

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USD/JPY

With a ripping move in the last two weeks, USD/JPY is on the radar again. Any time the yen weakens we hear about the enormous Japanese public debt and their seemingly eternal easing program and how it’s all going to come crashing down. Then there is the almost comical official “reactions” to yen strength. Since the all time high of about 306 in December of 1975, it made a record low of 75.55 in October of 2011. In the 80’s economic boom the exchange rate moved from 260 in early 1985 to 120 in 3 years – a massive appreciation! When Japanese economy, stock market, property prices peaked in 1990 the exchange rate was 160. All that can be seen on the charts below which will naturally exclude anything fundamental about the USD/JPY. Most charts have comments on them and I’m starting from lower timeframes first.

[click on charts to open in new tab]

So whilst everyone can see that the loooong term trend is down for this pair, markets move up and down and we shouldn’t be surprised if this pair goes a lot higher. Doesn’t mean it will even though there is a lot of energy about 85.50 in the shorter term.

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The Week Ahead According To 10cents

The title of this post is just my attempt at some humour because I really don’t have a clue what awaits in the week ahead. All I have is ideas for set-ups, some probabilities, and how I will trade them.

[click on charts to open in new tabs if you wish]

It is widely believed that USD/CAD “leads” the other USD pairs. I don’t follow this pair all that much so I don’t know if that’s true or not. What it shows is USD strength late on Friday, much more than other USD pairs. Maybe it was just a result of weak Canadian economic data. Of greater interest to me though are the clear tradeable levels and the hourly RSI clearly in bear-zone. Any serious move by RSI above 70 could be a trend changer.

Above are both the 1hr and Daily charts for EUR/JPY. We had a big 350pip move to end the week, significantly breaking out above previous daily highs. RSI on both timeframes is in the “strength” zone above 70 which indicates to me that the move is strong and will continue so buying dips would be encouraged. We know nothing goes in a straight line and I’d be looking for at least a 100pip retrace if the little double top on the hourly holds. There is also a sweet correlation that a 38.2% retrace move is almost exactly the previous daily high. If hourly RSI goes well below 30 then my bullish view may change.

GBP/JPY – ditto.

I’ve opted for the Daily and Weekly charts of AUD/USD. Friday’s candle was a shooting star at a previous high. I love shooting stars and definitely expect some kind of reversal. I’ve included the weekly chart on the right to show what could happen if there is no reversal or if it is a short-lived reversal. A break above the daily double top would see me a super AUD bull to look for a major double top on the weekly. 106.20 is a BIG line in the sand.

I wasn’t going to cover EUR/USD, it’s been done to death all over twitter and elsewhere but bugger it, here it is. The daily chart on the left shows how huge this move has been – a 1,126 pip move in only 38 trading days. And that 38.2% number has reared its head again. The gap has been filled and a trendline on RSI is inviting itself to be broken. The weekly chart on right only shows a rough channel that could look different depending on points used – a very rough visual guide only. I admit to trying to pick this top a couple times on Friday. I failed and stepped aside. If it fails at 1.3150 again then the choice to short again will be easier.

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Random Forex Charts

Some random forex charts that look interesting for trading this week.

[click on charts to open in new tab]

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AUD/USD Top Down Charts

Been a while since I’ve looked at a pair top-down style, going through the time frames. Here we go.

AUD/USD monthly chart shows two distinct and well defined price moves – a range of approx. 3000 pips and another of approx. 5000 pips. The recent all time high (post float) completed both these ranges.

A week ago I pointed out a very bearish candle pattern on the weekly called an evening star. This has been followed by a lower weekly close with a candle that could also be considered bearish.

A channel on the daily chart has been broken together with RSI moving below 50, as it did in March.

The hourly chart above points to a trend change – bearish MAs, bearish colour zone, break down of uptrend channel, a new low, and more moves below 30 than over 70 on hourly RSI since the high.

There are many indications that we’ve seen a high on AUD/USD. A 100pip move up from current levels could easily happen and would not change the above analysis. 200pips and I’d have to re-think. 🙂

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USD/JPY EUR/JPY GBP/JPY

Whenever I write a new blog post I always set out to write more words than usual, to add some commentary to the charts, a bit of humour and some general banter about the world. And nearly always I’m confronted with writer’s block. Today is no different so to hell with lots of words and let’s get stuck in to the charts.

PS. You will notice references to the RSI indicator today. I’ve always dabbled with indicators, never really serious with them, preferring straight lines, but lately I’ve been studying RSI and looking at it in a different way. I’m very happy with the way I’m reading it and the signals it’s providing – so confident enough to share. 🙂

First up is the chart I always look to first – USD/JPY. I rarely trade this pair but it provides me with bias for trading other xxx/JPY crosses. The DAILY chart above shows three clear levels with current price possibly making a higher low above the 78.00 level. I’d like to view this as bullish for xxx/JPY but it’s a bit too simple so let’s look deeper and check out the hourly.

The hourly chart above shows another clear barrier at 78.75 that would need to be overcome – sooner rather than later. And keep an eye on the hourly RSI – the first time it crosses 70 is not overbought but a sign of strength and it’s often just the beginning of a nice move. So no clear long signal yet. The recent dip below 30 may be the beginning of weakness. Now on to the other pairs that I’ll actually trade.

In the EUR/JPY Daily above I’ve identified three common UP moves over the past 12 months. You’ll see it has recently completed the small move represented by the black arrows. If a bigger move were to occur it’s very possible that, like in Jan-Feb and Oct last year, a pause may take place after the completion of the black range before continuing up. The daily RSI is suggestive of higher levels to come with its positive divergence and a clear line in the sand just above the 50 line.

EUR/JPY hourly might look a bit messy but the MAs, colour zone, uptrend channel and higher ranging hourly RSI all point to an uptrend – an uptrend that looks to be continuing. The first warning sign will be an RSI out of the red box below 30 to show weakness rather than oversold, just as in late July the move over 70 signalled new strength and a shift in range. So this is a buy I’d rather buy than sell, but I’d need a lower level to get in.

GBP/JPY daily has also completed its small range at prior resistance. It has a few bigger moves up its sleeve but it does love the aqua coloured down moves too. RSI is at similar level to the black moves in Oct and Jan after which price continued up.

On the GBP/JPY hourly we see higher lows and a break, backtest and hold of 124, a green colour zone and a higher ranging hourly RSI. I’ve omitted MAs because they haven’t been useful for the past few monts. At current levels this may be the first BUY for the week with 124 your risk level.

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Trading Charts

Some charts and levels I’m watching for the upcoming week.

[click on charts to open in new tab]

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