AUD/USD has been sliding in July, but this week's price action is signaling bullish continuation, at least toward the 2014-high around 0.95. With that being said, we can look at today's dip as a set up for a buy-on-dip strategy.
AUD/USD 4H Chart:
As price falls back to 0.9380-0.94 area, look out for buyers especially if the RSI in the 4H chart dips to 40 and stalls. If price starts to turn back above, respecting the 200-, 100-, and 50-period SMAs in the 4H chart, while the RSI also turns up from 40, get ready for a bullish attempt toward the 2014-highs.
A break below 0.9360 should probably shelve the bullish continuation outlook. If your entry is around 0.94, and stop at 0.9370, you have 30 pips of risk, to about 100 pips of reward, a slightly better than 3:1 Reward to risk ratio.
AUD/JPY 4H Chart 7/25
A pullback in AUD/JPY should find support around the 95.20-95.40 area, which was a common support/resistance area. The RSI in the 4H chart should also stall around 40. A break below 95.00 would probably shelve the bullish outlook, so let's say a stop is at 94.90. With en entry at 95.40, that would be 50-pip risk. With the target back to the 96.50 high on the year, the potential reward is 110 pips. This trade idea offers a reward to risk ratio of about 2:1.
Remember that AUD/USD and AUD/JPY are bullish in the daily chart, so the bullish outlook in the 4H chart is in-line with the prevailing trend. However, we should still limit the bullish outlook to the 2014-highs because the latest rally is simply on the back of stronger inflation data. Sure, 3.0% annual CPI inflation should push the RBA to raise rates, but don't be surprised if RBA gov. Glenn Stevens starts jawboning about the risk of a strong AUD, and AUD/USD and AUD/JPY approach the 2014-highs.
Trade Well, Trade Safe!
AUD/USD 4H Chart:
As price falls back to 0.9380-0.94 area, look out for buyers especially if the RSI in the 4H chart dips to 40 and stalls. If price starts to turn back above, respecting the 200-, 100-, and 50-period SMAs in the 4H chart, while the RSI also turns up from 40, get ready for a bullish attempt toward the 2014-highs.
A break below 0.9360 should probably shelve the bullish continuation outlook. If your entry is around 0.94, and stop at 0.9370, you have 30 pips of risk, to about 100 pips of reward, a slightly better than 3:1 Reward to risk ratio.
AUD/JPY 4H Chart 7/25
A pullback in AUD/JPY should find support around the 95.20-95.40 area, which was a common support/resistance area. The RSI in the 4H chart should also stall around 40. A break below 95.00 would probably shelve the bullish outlook, so let's say a stop is at 94.90. With en entry at 95.40, that would be 50-pip risk. With the target back to the 96.50 high on the year, the potential reward is 110 pips. This trade idea offers a reward to risk ratio of about 2:1.
Remember that AUD/USD and AUD/JPY are bullish in the daily chart, so the bullish outlook in the 4H chart is in-line with the prevailing trend. However, we should still limit the bullish outlook to the 2014-highs because the latest rally is simply on the back of stronger inflation data. Sure, 3.0% annual CPI inflation should push the RBA to raise rates, but don't be surprised if RBA gov. Glenn Stevens starts jawboning about the risk of a strong AUD, and AUD/USD and AUD/JPY approach the 2014-highs.
Trade Well, Trade Safe!
Recommended Content
Editors’ Picks
USD/JPY crashes nearly 450 pips to 155.50 on likely Japanese intervention
Having briefly recaptured 160.00, USD/JPY came under intense selling to test 155.00 on what seems like a Japanese FX intervention underway. The Yen tumbled in early trades amid news that Japan's PM lost 3 key seats in the by-election. Holiday-thinned trading exaggerates the USD/JPY price action.
AUD/USD rallies toward 0.6600 on risk flows, hawkish RBA expectations
AUD/USD extends gains toward 0.6600 in the Asian session on Monday. The Aussie pair is underpinned by increased bets of an RBA rate hike at its May policy meeting after the previous week's hot Australian CPI data. Risk flows also power the pair's upside.
Gold tests critical daily support line, will it defend?
Gold price is seeing a negative start to a new week on Monday, having booked a weekly loss. Gold price bears the brunt of resurgent US Dollar (USD) demand and a risk-on market mood amid Japanese holiday-thinned market conditions.
Ethereum fees drops to lowest level since October, ETH sustains above $3,200
Ethereum’s high transaction fees has been a sticky issue for the blockchain in the past. This led to Layer 2 chains and scaling solutions developing alternatives for users looking to transact at a lower cost.
Week ahead: Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.