19 Nov MO AUDUSD – 19.11.18
Long Term Overview:
The Recent RBA Interest Rate Decision turned out to be more dovish than expected primarily because of external demand issues for Australian exports and a weakening domestic environment. As a result, the AUD is forecast to see further negative sentiment.
The United States and Canadian government have forged a new trade agreement to replace NAFTA, preserving President Trump’s ability to impose a 25 percent global tariffs on auto parts from Canada and Mexico – The USMCA trade deal is set to strengthen the dollar in the mid – long term, as a result of a combination of lower market uncertainty and stabilisation of the continents long standing trading relationships.
Strength in the Dollar is forecast to see a further growth after the Federal Reserve implied once again that FOMC Interest Rate policy is likely to remain relatively hawkish; preventing excessive inflation in a firming economic environment. Interest rate normalisation is expected to be in the region of 2.50% to 3.50% which may reinforce overall positivity in the greenback. From an Economic stand-point, Price may see a continued drop south in the AUDUSD in the Long term.
Long Term Analysis
The Bullish support level in the AUDUSD was broken early in 2015, where since then it has acted a resistance level above price. A Deadcross presented itself at the beginning of 2018 – now forming a large amount of resitance above price. Bias is short on all monthtly charts presented and with the further strength forecast for the USD. Should current conditions persist, price may reach previous lows nearing the 0.6450 area in the next couple of months.
Decision Point: Break and close below previous high nearing the 0.7250 area
Long Term Trend: Short
Channel Range: N/A
Possible Bias: Short
Medium Term Analysis
Area of interest has been generated on the Weekly due to the current pullback into the Weekly 21EMA area. Overall bias is short on the bi-weekly and monthly timeframes; however, price has broken out of its descending bearish channel on the weekly. Divergence is also apparent on the weekly and price has begun to increase in Bullish volume on the weekly. Because of the recent found strength in the AUDUSD, paired with being oversold for a number of weeks. Price may pullback deeper into the Daily50EMA before moving further to the short side.
Decision Point: Push and close above previous low nearing the 0.7280 area
Long Term Trend: Short
Channel Range: Descending: 285 pips (Broken out of)
Possible Bias: Long