Hello, dear traders. Today we are going to technically analyze a special instrument created with the GeWorko
. We have observed that the Australian dollar against the US dollar moved from 0.8660 early in 2014 to 10-month peak at 0.9500 on the first of July, that is a 9.72% bullish move. Then the currency pair entered in sideways trading between 0.9502/0.9206 zone.
We decided therefore to check whether the bulls will overcome the sideways zone in the AUDUSD pair and if they would manage to extend the uptrend structure. For that we are using the Australian dollar against a broad basket of currencies; we also included the golden metal. We created a financial instrument with the AUD as base currency and quote currencies the Sterling, the Canadian, the Swissy, the Euro, the Yen, the Kiwi, the Greenback and the Gold. We named it AUD Ratio
By using NetTradeX
we are able to create our own Personal Composite Instrument. We use equal weights for the quote currencies and the Gold, in order to capture the impact of all the counterparties to the Australian dollar. Each quote party has equal weight of 12.5%. So when the AUD ratio goes up it means that the Aussie gains against the quote parties and when the AUD Ratio falls means that the Kangaroo currency dips. For a guide on how to create your personal composite instruments (PCI) by using Geworko Method check out this link PCI Guide
Now let’s look at the AUD Ratio price chart. We can observe a clear up trend on the price pattern with a valid rising trend line as an indication. The uptrend started from early January from 0.9304 and peaked yesterday at 1.0025 that is a 7.72% surging move. Based on this the AUD Ratio made a smaller rising move in the last 8 months however at the moment the AUD Ratio makes new high while the AUDUSD is still in range. Moreover, the AUD Ratio has previously provided some early signs. If we look at the AUDUSD chart, the currency pair did a higher peak at 0.9500 on July 1st while at the same time the AUD Ratio was making a lower high. That was a warning for a “bull trap” or in other words a fake higher break through, which afterwards was authenticated by prices in later trading sessions. Therefore, we can use the AUD Ratio as an indicator for the AUDUSD.
Looking at the oscillators the AUD Ratio seems overextended to the upside. The Stochastic is currently in the overbought territory and the OsMA is at previous peaks area. In our opinion and based on that technical analysis the AUD Ratio could make a retracement in the following trading sessions but eventually we would expect the upside direction to continue. Additionally, the AUD Ratio depicts some significant conclusions for the Aussie against the US dollar pattern that is the currency pair is likely to move to the upside and continue its rising structure.
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