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Short-term Trading Idea FX AUD/USD – Bull Speculation: Bull Divergence on the Weekly Timeframe

Trading opportunities for currency pair: bull divergence has formed on the weekly and this is a signal to buy Australian. If the Chinese indices and oil continues to rise, an AUD/USD rise to 0.7155 can be considered as part of a general dollar correction. The AO indicator is showing a double bull divergence on the weekly timeframe. If the AUDUSD will strengthen above 0.7155, we can target 0.7325. Growth will cancel with a close of the daily cancel below 0.6826.

Background

The last Aussie dollar idea I made came out on 28th December of last year. At that time, the Aussie was going for 0.7272 against its US counterpart. In the idea I was relying on a symmetrical triangle and expected trading to be conducted in a 0.7100-0.7370 range. After the forming of an “e” wave I expected to see the price head upwards with a 0.7620 target.

The AUD/USD traded in the range until the end of the year. A break of the lower limit of the triangle took place on 6th January. The growth scenario was cancelled. The Aussie dollar dropped to 0.6826. I was wrong about how the waves were set out. The Australian dollar fell because of market participants fleeing risk due to the fall in oil prices and the Chinese stock markets.

Current situation

The fall stopped at the support line. The support is projected from 4th September, 2014’s minimum and runs parallel to the 0.7439 (11/08/2015) and 0.7384 (04/12/2015) maximums.

The Aussie restored from 0.6826 to 0.7003. The weekly growth was 2%. It strengthened on the back of oil price rises and a rise in the stock indices.

Bull divergence has formed on the weekly and this is a signal to sell the Australian. If the Chinese indices and oil continues to rise, an AUD/USD rise to 0.7155 can be considered as part of a general dollar correction (see weekly graph).

The new phase of falling started in September of 2014 and so the time is right for a correction. A double bull divergence can be seen on the AO indicator. If the AUDUSD strengthens above 0.7155, we can target 0.7325.

 

Vladislav Antonov, Alpari analyst

Monday, 25 Jan, 2016 / 9:24

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Source : http://alpari.com/

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