G’Day Mates! Last week I talked about an Ichimoku confirmation and shared our trading strategy with our investing group members. Shortly after, two of our medium-term AUDUSD profit targets were reached. So naturally, we want to know what’s next. Let’s catch up with our Aussie buddy as he dances versus Ms. USA on the forex dance floor!
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1- Technical Points: AUDUSD Profit Targets Reached
What went down: AUD/USD confirmed below the daily Ichimoku cloud on April 27th. This was especially significant, because the pair also confirmed below the 38% Fibonacci level at 0.7526. After forming a Doji Candlestick pattern we saw our typical Ichimoku Secret correction which triggered our SELL orders at 0.7526.
AUDUSD Profit Targets Reached – Daily Chart
Our first two AUDUSD profit targets were reached on May 3rd and then again on May 5th. With one more higher risk profit target to go, the AUD/USD pair started Monday’s Sydney session in massive bearish pressure, pushing below the 61% Fibonacci level.
What’s Going On Long Term: On the monthly chart reveals that the pair continues to range between 0.7610 and 0.70 inside a rectangle chart pattern. The candle for month of May is now appearing to form a Three-Black-Crow. The pair has remained below the monthly Ichimoku cloud. And it could be in the middle of completing a Saucer Top chart pattern.
AUDUSD Profit Targets Reached – Monthly Chart
2- Fundamental Points
Fundamental analysis is the second step in IDDA approach to developing a trading strategy in forex. We looks at the respective currency’s country’s economy and political developments to help with our trading decision.
Aussie Side: Australia’s Building Approvals for March came in red at -13.4%on Monday, way below last month’s reading of 8.9% and the expected -0.4% on a MoM basis.
Comparing to March reading last year year, the number of domestic building permits granted for the month was also a disappointment at -19.9%. This explains Monday’s bear attack on Mr. Aussie.
- Australia’s Annual Budget Release on Tuesday May 9
- China’s Consumer Price Index (YoY) (APR)on Wednesday May 10
US Side: The April NFP report printed an upside surprise and so Ms. USA dropped as a result of market participants taking profit. Also, the details of the jobs report failed to impress.
Now we have to wait and see what this week’s unemployment claims brings on the table on Thursday. Oh, and also the CPI data on Friday.
P.S. France chose NOT to go in the same political direction of the US and the UK. Now that EU-loving, progressive Macron is the leader of France, tensions could get higher in the U.S. Which could put pressure on the US dollar.
3- Sentiment Points
Sentimental Analysis is the third point of the IDDA when trading forex. We typically take a contrarian view to crowd sentiment.
At the time of writing, the trading crowd seem to have started profit-taking on their short positions, as the pair started to correct earlier drops. On short-term time frames we could see further pullbacks towards 0.7420 and 0.7450.
As 4th point of the IDDA, you must calculate your risk tolerance before deciding on which trading strategy is suitable for your portfolio. Join us in our daily strategy development room by becoming a member of our investing group!
Disclaimer: Forex is one of the HIGHEST risk investing instruments there is. If you don’t have sufficient risk tolerance to trade forex, you can try investing other online securities.
Combining technical analysis and other developments, here are Invest Diva’s calculations for important approximate levels to keep an eye on:
|Support Levels||Turning Point||Resistance Levels|
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