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AUD/USD Technical Analysis - AUD/USD Trading: 2018-08-27
A new Prime Minister was elected in Australia
A new Prime Minister was elected in Australia. Will the Australian dollar rise?
Former Australian treasurer Scott Morrison became the new leader of the ruling Liberal party of Australia and simultaneously Prime Minister. This reduced the political uncertainty in the country. Some investors believe that the liberal government may support the further tightening of monetary policy following the US Federal Reserve’s example and at least refrain certainly from cutting further the interest rate. The rate of the Reserve Bank of Australia (RBA) has been at the 1.5% historic low for already 2 years. Current inflation is equal to 2.1% year over year and is in the target range of 2-3%. The next RBA meeting will be held on September 4, 2018. The rate will remain unchanged.
On the daily timeframe, AUDUSD: D1 is in a downtrend. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of the publication of positive economic statistics in Australia.
- The Parabolic indicator gives a bullish signal.
- The Bollinger bands have widened a lot, which indicates high volatility.
- The RSI indicator is near 50. It has formed a positive divergence.
- The MACD indicator gives a bullish signal.
The bullish momentum may develop in case AUDUSD exceeds its last fractal high and the resistance line of the downtrend at 0.74. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the Parabolic signal, the low since January 2017 and the lower Bollinger band at 0.72. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (0.72) without reaching the order (0.74), we recommend to close the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
| Position | Buy |
| Buy stop | Above 0,74 |
| Stop loss | Below 0,72 |
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