By IFCMarkets
Australian dollar under pressure
Let us have a look at AUD/USD pair on the daily timeframe. The pair has been falling since mid-May with fall in prices for Australia’s main export commodities. The Reserve Bank of Australia (RBA) left the interest rate unchanged at 2.0% at its August 4 policy meeting. On August 10 People’s Bank of China devalued yuan by 1.9% against the dollar. China’s central bank manages the exchange rate by setting an official midpoint and allowing it to move 2% above or below that midpoint each day. The official yuan exchange midpoint was set lower the next day too, resulting in about 4.8% loss against dollar in two days. China is the major buyer of Australia’s commodity exports, and weaker yuan means Chinese companies will import less goods from Australia, putting additional pressure on the pair.
The AUD/USD has been trading within a downward channel for the last three months. The Parabolic indicator gives a sell signal. The RSI-Bars oscillator falls within a bearish channel. The Donchian channel also has a downward bias. The breach and closing below the lower Donchian channel at 0.7216 will signify the continuation of bearish momentum. A pending order to sell can be placed below that level. The stop loss can be placed above the upper Donchian channel at 0.74383, which is confirmed also by Parabolic signal and last fractal high. After placing the 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 without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
| Position | Sell |
| Sell stop | below 0.78492 |
| Stop loss | below 0.76804 |
Market Analysis provided by IFCMarkets