Weak economic data bearish for Australian dollar
Australian economic data were weak recenttly. Will the AUDUSD continue weakening?
On the daily timeframe AUDUSD: D1 is retracing lower after hitting sixteen-month high in the beginning of September. The price has fallen below the 50-day moving average MA(50) and the support line.
- The Donchian channel indicates downtrend: it is tilted down.
- The MACD indicator is below the signal line and the gap is widening, which is a bearish signal.
- The Parabolic indicator gives a sell signal.
- The stochastic oscillator has breached into oversold zone which is a bullish signal.
We believe the bearish momentum will continue after the price closes below the lower boundary of Donchian channel at 0.7811. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the fractal high at 0.8102. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (0.8102) without reaching the order (0.7811), we recommend cancelling the position: the market has undergone internal changes which were not taken into account.
Summary of technical analysis:
| Position | Sell |
| Sell stop | Below 0.7811 |
| Stop loss | Above 0.8102 |