Top Trade Idea for the 2nd -3rd February 2014 – AUD/USD - Rumor has it that Australia’s interest rates are not going to budge as predicted by 25 of Australia’s leading forecasters, so what would it mean for us traders and what should our game plan be for trading the AUD/USD ? Last week, I made a forecast following a potential ‘W’ pattern suggesting entry for an upwards move of the C to D leg based on a 30 minutes chart. That pattern unfortunately didn’t turn out as predicted as prices for the Aussie didn’t quite recover for a bullish run since bears dominated instead. This phenomena of sentiments prevailing the Aussie at the moment are much impacted by the Reserve Bank of Australia and its’ governor hinting that they are not intending to touch its’ current interest rate of 2.5% for at least the whole of 2014. This so called ‘news in the air’ is beginning to be reflected on the charts all across several time frames from the 30 minutes right up to the daily chart giving more sell signals as oppose to buying potentials. What could further strengthen some of the views that rates might either stay put or even go lower is by looking at what China’s policy makers are currently doing and their current expectations of their economic status. If the Chinese are expecting a weaker growth this year, then that would mean a further slide in Australia’s terms of trade. We may not be sure of this but by looking at Australia’s import numbers alone, it does look like a progressive slid has occurred by up to 18% from its’ peak in 2011. From the ongoing news, it does look like most investors are also talking or expecting a further fall by 3.5% of Australia imports and current weakening of the economy in the emerging markets led by China’s weakening economic data may just justify the whole bearish scenario of the Aussie. Screen Shot 2014-02-02 at 2.29.28 PM From a harmonic patterns point of view and as seen above on a daily chart, an ABCD pattern could potentially see prices travelling downwards from C point to the eclipsed shape zone marked at D between 0.8596 to 0.8214 area. An ideal entry point would be a level lower than the 0.8750 potentially at 0.8740 or for one who is more conservative at the 0.8710 level. Happy Pipping ! - See more at: forexnews/blog/2014/02/02/top-trade-idea-2nd-3rd-february-2014-audusd/#sthash.zV3hbgoz.dpuf
Posted on: Mon, 03 Feb 2014 13:53:27 +0000
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