Technicals | Jan 28 2015
Bottom Line 27/01/15
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 79.00 – 80.00 / 76.70 / 70.01
Resistance Levels: 83.70 / 86.60 / 89.10 / 92.00
Technical Discussion
'Basically we have huge respect for 79.00 – 80.00 especially as historically it lines up with a very strong line of support. Needless to say if price breaks below it and sticks, then the Aussie looks destined for a very long and drawn out period of weakness.' A familiar quote from our previous reviews that may now be coming to fruition. Price has recently pushed below 79.00 by a small margin and it is now a matter of seeing whether this significant breakdown is going to stick. Ideally it won't, yet with commodity prices continuing to weigh and a February rate cut of 25 basis points gaining momentum, our currency certainly looks as though it is going to remain under pressure for the time being.
Reasons to be bearish (longer term optimism only above 79.00 – 80.00):
? Inflation remains in check in Australia and unemployment an issue
? Interest rates for the most part at record lows. U.S recently flagging hikes
? possible interest rate cut flagged for Australia in February
? major support 79.00 – 80.00 under pressure
? higher degree 61.8% retracement now in play
The drop to 78.50 last night was the lowest level since mid 2009. Price ended up closing out the session at 79.20 towards the days highs yet unless it can start to embark on a series of higher low and higher high trading sessions, then the bears will continue to remain in control. Short term supportive factors right here include the higher degree 61.8% retracement zone, Type-A bullish divergence on the dailies and a strong support zone circa 79.00 – 80.00. These factors combined may well be leaned on by traders over the upcoming sessions to move in on some speculative buying, yet it would be an aggressive play if it were to come about. Overall price is still in a major downtrend and it is going to take more than a few days of positive price action to start turning things around. Any convicted move below last nights low though will likely be the final nail in the coffin.
Trading Strategy
We are going to stay conservative (and realistic) and not take on any further aggressive positions on the long side via a traders trick entry above last nights high at 79.30. We will keep an eye on the SaR trigger though which presently sits at 83.00 and also aligns the recent pivot point high that rejected on the 15th January. Stand aside for now yet watching closely.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
Risk Disclosure Statement
THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.
Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
