Improving global growth lifts Australian dollar
The Reserve Bank of Australia held its policy unchanged at May policy meeting. The Australian dollar is rising after positive recent data. Will the Australian dollar continue strengthening?
On the daily timeframe AUDUSD: D1 is rebounding after hitting five-month low in the beginning of May. The price has approached the 200-day moving average MA(200).
- Parabolic indicator has formed a buy signal
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is below the signal line and the gap is narrowing, which is a bullish signal.
- The stochastic oscillator has bounced off from the overbought zone threshold and is falling.
We believe the bullish momentum will continue after the price closes above the upper boundary of Donchian channel at 0.7516, confirmed also by fractal high. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the Parabolic signal at 0.7389. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (0.7389) without reaching the order (0.7516), we recommend cancelling the position: the market has undergone internal changes which were not taken into account.
Summary of technical analysis:
| Position | Buy |
| Buy stop | Above 0.7516 |
| Stop loss | Below 0.7389 |