EUR/AUD – Strong sell
I’ll come out swinging by saying that the EUR/AUD is a great sell opportunity right now. The fundamentals and the technicals on a one day chart indicate the start of a new trend downwards.
1. MACD has recently displayed petering upwards momentum and is now displaying increasing downwards momentum. The histogram is showing a new move into bearish territory.
2. Commodity Channel Index has confirmed the price falling into sell signal territory and with conviction.
3. Bollinger band is tight with a new break downwards. Constricting bands indicate a possible spike in either direction.
4. The end of head and shoulders pattern.
5. A 20 day Moving Average is starting to fall with price moving below the line. Potentially the start of long term trend downwards.
6. The Australian dollar has benefitted from capital flight from China and comparatively higher interest rates. Risk appetite for more diverse currencies is increasing as well.
USD/JPY – Neutral
This pair is offering a great opportunity because we can expect a spike in either direction. What a trader might do is place a sell stop or a buy stop on either side of the price. Once a position is taken, close the opposite stop order (you can do this through an OCO).
1. The Bollinger Band is constricting, possible informing us of market consolidation. We expect a spike in either direction.
2. The 100 day and 20 day moving average have met and are tracking sideways. The price is also at the same level.
3. The MACD and CCI is illustrating to us there is no momentum in either direction and that the pair should make a move up or down in the near future.
ASX 200 Index – Sell
The AXJO is clearly moving in waves. Recently completing a wave up, it has met critical resistance and the price is now falling in line with its historical pattern. Although the recent price action has been choppy, the very short-term moving average is demonstrating a downwards trend.
1. Australia is following its lead from China. The negative news emanating from China is certainly affecting Australian equities, specifically mining stocks. Australian market sentiment also appears to be negative.
2. Several large Australian financial institutions such as Westpac have recently commented that the Australian economy will grow at a sluggish pace in 2014. This growth should be outpaced by other regions recovering from the GFC.
3. Both the MACD and the CCI demonstrate increasing downwards momentum. The CCI is firmly in sell-off territory. When this indicator moves back into the channel, we will then close our short positions.
4. The price has been trading between a clear range for some time now. The price has recently bounced off the recent resistance level of 5492.