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 made a considerable bearish move in the recent trading sessions.
We decided therefore to check whether the bears will persist on the AUDUSD pair and if the short positioning is still a good trade. 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 as indicated by the weekly and the daily valid rising trend lines. Based on the Dow theory the AUD Ratio is more likely in the long term to go higher however at the moment the AUD Ratio makes a retracement towards the 61.8% Fibonacci level at 0.9973 while the AUDUSD is falling heavily and is clearly in a downtrend. Therefore we could argue that the AUDUSD forex pair is mostly impacted due to greenback’s strength and not because of the Aussie weakness. The AUD ratio could finish its retracement at 0.9973 and return to upside bias, however that does not mean that the AUDUSD would stop its downward spiral.
As we can see at the Aussie Relative Performance chart below where each major currency performance is shown compared to the Australian dollar. The Aussie was performing badly since 08th of September against all the major currencies except the Gold. The worst performance was against the US dollar and the Euro while it seems that the declining Gold is adding to the Australian dollar selling pressure.
Looking at the oscillators the AUD Ratio was overextended to the upside. The Stochastic was deep in the overbought territory and the OsMA was at previous peaks area, lastly the RSI (14) was above the 70 line. In our opinion and based on that technical analysis the AUD Ratio is likely to continue its retracement to 0.9973 in the following trading sessions but eventually we would expect the support at 0.9973 to hold its ground and lift quotes. Additionally, the AUD Ratio depicts some significant conclusions for the Aussie against the US dollar pattern that is the bearish power of the currency pair could fade soon. Its prices would either go in consolidation or at a slower pace continue falling, therefore new short positions on AUDUSD could not be the right decision.
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10 сентября 2014 г. @ 10:46