Point to Establish Short Exposure: The Australian Dollar continues to disappoint bulls who were hoping record levels in equity markets would equ a te with a similar buying of carry trade currencies i. On Tuesday morning, the RBA led by Philip Lowe poured cold water on possible reasons why they may turn hawkish that could lift the Australian Dollar in the short term. After keeping the rate on hold at 1. While the US Dollar has not been a stellar performer, the prospects for the Dollar gaining against the Australian Dollar align with what is shown on the chart with a series of lower highs since early September and also through correlated metals markets.
Metals have taken a hit at the open of December on the fear that Chinese YoY demand growth is slowing providing Copper with its largest drop in 2-years on December 5.
The trade would like to take advantage of a continuation of the downtrend on a bearish impulsive breakdown. The signaling level that this trade may be working out would be if the price breaks below The in i tial stop or idea invalidation would be at 0. However, the correlation of spot to the risk: Access our popular free trading guides to enhance your trading strategy here. IG Client Sentiment Highlight: Retail trader data shows The number of traders net-long is 3.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUDUSD-bearish contrarian trading bias emphasis added. Last week, we set up an analyst pick trading around Sterling. This would place the market in the c wave of an a-b-c bearish zigzag.
The c wave should subdivide into five waves. It appears the first wave is complete and a second wave is currently underway. Bears will get another opportunity to short with a positive risk to reward ratio on the second wave partial retracement higher.
Why is a positive risk to reward ratio of 1 to 5 important, read about it in our Traits of Successful Traders research. Therefore, we will tighten the stop loss to the beginning of wave i at.
Our first target remains at. New to FX trading? We created this guide just for you. Get started learning about Elliott Wave. Grab the beginner and advanced Elliott Wave trading guide. This is another short-side Aussie setup; and two targets remain from our prior setup investigated earlier in November.
Dollar altogether and instead use the New Zealand Dollar. The pair has spent much of the past three years displaying some element of mean reversion; and while the support side has been less horizontal in nature from what most traders would prefer when trading a range, the resistance side of the coin has been fairly consistent around the 1.
The most recent test around this area took place last month. Chart prepared by James Stanley. Since then, price action has continued to exhibit tendencies of a turn-lower. On the four-hour chart below, we can see the further development of lower-lows and highs until, eventually, the 1. Bears have yet to be able to show a sustained break below 1. Stops on the position can be investigated above the November swing-high at 1.
After that point, 1. Contact and follow James on Twitter: The Euro may be preparing to reverse course downward after rising to the highest level in nearly two years against the Australian Dollar.
Prices have put in a bearish Evening star candlestick pattern following a test of channel resistance. Negative RSI divergence bolsters the case for a downside scenario. Near-term support is at 1. A break below that confirmed on a daily closing basis initially opens the door for a challenge of the Alternatively, daily close above the November 27 high at 1. The first objective is at 1. A stop-loss will be triggered on a daily close above 1. Half of profit will be booked and the stop trailed to breakeven on hitting the first target.
Just getting started trading the Euro and the Aussie Dollar? I highlighted the potential for a double-top break down here in EURNZD earlier in the week and the focus remains on key near-term support here at 1. Remember, the broader outlook remains weighted to the topside but a break below this threshold would suggest a larger correction is underway before resumption.
Risk is lower while below 1. Get started with our Free Trading Guide! Learn the traits of a successful trader in this Free eBook! The rebound is at resistance and the focus is on whether an exhaustion pullback will materialize into more. Gold prices may face renewed selling pressure after a brief pause as market-wide risk appetite swells anew but fickle markets might change course yet.
Move Back Below 1. Click here to dismiss. James Stanley , Currency Strategist. Ilya Spivak , Sr. Global macro Average Time Frame of Trades: Michael Boutros , Currency Strategist.More...