AUDUSD Forex traders might have noticed the long-term range that started developing exactly a year ago in April 2016. The pair is once again trapped inside the daily Ichimoku cloud. With the economic developments in China and around the world, it is time for an IDDA approach to develop an AUDUSD forex trading strategy for our mates down under.
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1- Fundamental Points
China: As Australia’s biggest trading buddy, we need to look at their economic data when it comes to Aussie trading.
Based on the economic data in the past week, China’s GDP expanded at a slower quarter-on-quarter pace in Q1. Year-on-year, however, China is on track to meet the PBoC’s target annual growth of around 6.5%.
Both the manufacturing and service sector are still growing, although at a slower pace.
China has a problem with headline inflation, and getting within the PBoC’s 3% inflation target seems rather unlikely.
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Australia: Economic data out of Australia in April has been generally either upbeat, or unchanged.
For example their employment jumped from 2.8k to 60.9k which gave Mr. Aussie a kick in the butt on the forex dance floor. Their participation rate also went up, while unemployment remained unchanged at 5.9%, which is still not too bad.
The RBA kept their interest rates unchanged beginning of April, siting concerns over soaring housing prices.
One week later, the central bank signaled even deeper concern on housing and “heightened risks” from rising household debt and escalating property prices in Sydney and Melbourne.
Their Consumer Price Index next week could give us more insights on purchasing power of our mates in the Land Down Under.
US: Kinda mixed. Manufacturing conditions came out better than expected, in April. And so did their trade balance. However non-manufacturing PMI disappointed. And so did the Non-farm payrolls (NFP). In fact, the NFP surprised the economists so much that the USD dropped like a hot rock. Specifically, the U.S. economy only generated 98K jobs. This is obviously a very significant miss from the expected net increase of 175K.
What else? Missiles. Trump’s chocolate cake. North Korea. Tax Day.
This brings up to the second point of IDDA: Technical analysis.
2- Technical Points: AUDUSD Forex Trading
The AUDUSD pair has been ranging between 0.7747 and 0.7169 for the past year, after it dropped massively from the highs of 0.93 throughout 2014 and 2015. AUD/USD hit the 0.77 resistance for the 8th time end of March. And is now trapped inside the daily Ichimoku cloud. However the Tenkan line has crossed below the Kijun line, which is a medium-risk confirmation for Ichimoku traders.
AUDUSD Forex Range Inside Ichimoku Cloud
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AUDUSD forex traders were supported at the pivot of 0.75 as better-than-expected Aussie news hit the markets. Now the question is, will the pair be able to break above the Ichimoku cloud once again?
3- Market Sentiment
Retail trader data shows 45.8% of traders are net-long the AUDUSD forex trade on Monday. The number of traders net-short is 4.7% higher than yesterday and 0.1% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUDUSD forex prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed AUDUSD forex trading bias.
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Here are Invest Diva’s calculations for important approximate levels for AUDUSD forex range to keep an eye on:
|Support Levels||Turning Point||Resistance Levels|
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