FX Market Analysis – AUDUSD January 2020

*Live market analysis with trading opportunities on the AUDUSD FX currency pair*

In this blog post I am going to share with you my technical analysis of the AUDUSD FX currency pair. I will show you my current long position on AUDUSD and give you an explanation of where I predict price will go over the next few days/weeks.

As always, all my technical analysis is done using the TradingView charting software. You can get access to their website by clicking on the link below.

https://tradingview.go2cloud.org/SH3bP

Let’s start by looking at the weekly timeframe chart.

AUDUSD weekly timeframe chart

As you can see, on the higher timeframes AUDUSD looks heavily oversold vs the USD. The Australian Dollar is trading at a near 40% discount against the US Dollar from the 2011 highs. Therefore I am of the opinion that there is still a lot of upside potential to be traded.

From a technical perspective I think we are now in an important trend reversal stage where the continuous weekly lower highs and lower lows of the bearish trend are ending. The bearish trendline was broken to the upside at the end of last year and we have finally seen new weekly higher highs made over the new year.

There is now 2 consecutive higher lows forming a bullish trendline that I believe we can use to trade long term bullish swing trades upwards. Currently price has just made a 3rd torch and bounce off of this new bullish weekly trendline so if it does hold strong then I think we could be in for a good 300 pip swing to the upside.

Why AUDUSD?

The reason why I am trading the Australian Dollar against a short bias on the US dollar is because it currently has the 3rd highest central bank interest rate out of the currency majors. It is slightly lower than their neighbours, the NZD but the technical analysis on the charts for AUDUSD is much better.

By trading a higher interest rate major pair against the USD bearish bias, it means I am getting the best carry trade profile possible. This means holding long term positions is more profitable (or less costly) than if I was to trade the Euro or Yen against the dollar.

Let’s look at the daily timeframe chart to see my current long trade position.

AUDUSD daily timeframe chart

The daily timeframe shows the weekly price waves much clearer. I have numbered them for you so you can see the wave count because if you are aware of the Elliot wave theory, then you will know that trends tend to move in counts of 5 waves. We have now seen 4 waves and if this bullish wave takes off then it will be a perfect example of the Elliot wave theory playing out in the markets.

There has been a nice bullish daily wick rejection of the bullish trendline and my CB_Vix volatility indicator is showing strong “oversold” conditions.

AUDUSD 4 hour timeframe chart

My first entry was yesterday afternoon after the strong 4hr bullish candles showed a nice bounce off of the weekly higher timeframe bullish trendline. I then waited for the next lower timeframe pullback to enter long at a slightly discounted rate on the next higher low.

Price has now broken the counter trendline, 1hr 50 EMA and is approaching and testing the 4hr 50 EMA. There is still a long way to go and we may see some indecision whilst the buyers gather strength to push price upwards.

My first profit target is the 0.69200 resistance zone. This level needs to be broken next before I can be certain that price will go on to make new higher highs. The higher timeframe trend is on outside as shown on the daily and weekly charts but that does not make this trade a certainty of success.

Market Fundamentals:

There is no major high impact economic data to rereleased this week relating to the AUD or USD but there is some mid level data coming out this evening.

A snapshot of the economic calendar for these 2 currencies can be seen below. Click on the image below to go to the full calendar.

Price Predictions:

Looking at the 1 hour timeframe chart, I can show you what I will look for to happen next.

AUDUSD 1 hour timeframe chart

What I would like to happen first is that todays price highs are broken and price to go back above the 4hr 50 EMA. From there it would be good to see a nice intraday bullish trend develop and price go on to test and break the 0.69200 resistance zone.

This chart also shows my ideal scale in entries should price do what I think it will. These are marked by the circles and arrows. These are both intraday trading set ups utilising simple support/resistance analysis and trendline/trend analysis.

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

https://tradingview.go2cloud.org/SH3bP

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

https://www.icmarkets.com/?camp=38537

FTMO Trader Funding Programme.

https://ftmo.com/?affiliates=335

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

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