Weak data bearish for AUDUSD
August retail sales were stagnant while building permits fell in July in Australia. Will the AUDUSD slide continue?
The Reserve Bank of Australia left the interest rate at 1.5% and signaled a stady policy ahead at its September 4 meeting. Economic data have mostly been weak since its last meeting on August 7. Change in consumer confidence has been negative in August, as evidenced by Westpac consumer confidence change, building permits fell in July, and retail sales over month were stagnant. The accelerated expansion in manufacturing in August as measured by AIG Manufacturing index was the sole significant positive report. Weaker data are bearish for AUDUSD .
On the daily timeframe AUDUSD: D1 is trading with negative bias after hitting thirty-nine-month high in the end of January and has stayed below the resistance line. The price has fallen below the 50-day moving average MA(50) too.
- The Parabolic indicator has formed a sell signal.
- The Donchian channel indicates downtrend : it is tilted lower.
- The MACD indicator is below the signal line with the gap widening. This is a bearish signal.
- The stochastic oscillator is in the oversold zone, this is a bullish signal.
We believe the bearish momentum will continue after the price breaches below the lower Donchian boundary at 0.7165. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 0.7381. After placing the pending 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 (0.7381) without reaching the order (0.7165) we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell Stop | Below 0.7165 |
| Stop loss | Above 0.7381 |