Jump to content

AUD/USD at the Extremes, Fading EUR/GBP Rallies Remains Appropriate


Recommended Posts

AUD/USD, EUR/GBP Analysis and News

  • AUD/USD Hitting Extremes
  • Fading EUR/GBP Rallies Remains Appropriate

DailyFX Blog | AUD/USD At The Extremes, Fading EUR/GBP Rallies Remains  Appropriate | Talkmarkets

AUD: During Friday’s the daily RSI on AUD/USD cracked through 20, a rare occurrence, which highlights just how extreme the move on the downside has been for the pair. When looking at the RSI, I tend to focus on the indicator when it is at extremes or divergences occurs, not simply when the indicator crosses 30 or 70. When at extremes, the RSI can be a great tool when looking for reversals, which was the case when I looked at the extreme upside in AUD/JPY back in October and since hitting the reversal trigger, the cross fell 6%.

Looking at AUD/USD, the daily RSI has only broken below 20 on five occasions (including last Friday), therefore it is worth noting that the sample size is very small. The question is now, is that with AUD/USD heavily oversold, and positioning data showing Aussie net shorts at a fresh record peak, is the bad news now priced into the currency. In the short term, this will largely be dependent on the risk appetite and given the recent move to 4500 for SPX, I am somewhat neutral on the risk sentiment. Taking a look at the data, the results are relatively mixed. However, if you have a buy the dip mentality for risk appetite, it may be better to express this view via AUD/USD as opposed to SPX.

AUD/USD at the Extremes, Fading EUR/GBP Rallies Remains AppropriateAUD/USD at the Extremes, Fading EUR/GBP Rallies Remains Appropriate

Source: Refinitiv, DailyFX (X+1 = 1-day after AUD/USD RSI crosses 20)

Relative Strength Index Guide

EUR/GBP: The bias for EUR/GBP remains to fade GBP weakness as the cross approaches the 200DMA. Doubts over a December BoE rate rise has increased after Friday’s cautious comments from BoE’s Saunders, who is typically seen as the most hawkish member of the MPC. The rate setter noted that there may be an advantage in waiting for more information on the Omicron variant before deciding to adjust policy settings. Additionally, Saunders stated that he sees a limited increase in the Bank Rate, which is in stark contrast to OIS markets pricing in near 1% interest rates by the end of 2022. This saw the probability for a December rate hike fall from 50% to 30%, with scientific data on omicron seemingly another condition for a rate rise. In turn, the focus for GBP traders will be on BoE’s Broadbents comments, scheduled for 11:30GMT.

EUR/GBP Chart: Daily Time Frame

AUD/USD at the Extremes, Fading EUR/GBP Rallies Remains Appropriate

Source: Refinitiv

 

By Justin McQueen, Strategist, 6th December 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Elliott Wave Analysis TradingLounge Daily Chart, Polkadot/ U.S. dollar(DOTUSD) DOTUSD Elliott Wave Technical Analysis Function: Counter Trend Mode: Corrective Structure: Flat Position: Wave C Direction Next higher Degrees: wave (II) of Impulse Wave Cancel invalid level: Details: Wave II Is equal to 61.8% of Wave I at 5.225 Polkadot/ U.S. dollar(DOTUSD)Trading Strategy: Polkadot overall is still in the period of correction. In the position of wave (II) with a double corrective pattern, the view is therefore for a short-term pullback before rising again in wave (III), waiting for the correction to complete to rejoin the uptrend. Polkadot/ U.S. dollar(DOTUSD)Technical Indicators: The price is below the MA200 indicating a downtrend, The Wave Oscillator is a Bearish Momentum. Elliott Wave Analysis TradingLounge H4 Chart, Polkadot/ U.S. dollar(DOTUSD) DOTUSD Elliott Wave Technical Analysis Function: Counter Trend Mode: Corrective Structure: Flat Position: Wave C Direction Next higher Degrees: wave (II) of Impulse Wave Cancel invalid level: Details: Wave II Is equal to 61.8% of Wave I at 5.225 Polkadot/ U.S. dollar(DOTUSD)Trading Strategy: Polkadot overall is still in the period of correction. In the position of wave (II) with a double corrective pattern, the view is therefore for a short-term pullback before rising again in wave (III), waiting for the correction to complete to rejoin the uptrend. Polkadot/ U.S. dollar(DOTUSD)Technical Indicators: The price is below the MA200 indicating a downtrend, The Wave Oscillator is a Bearish Momentum.       Technical Analyst : Kittiampon Somboonsod Source : Tradinglounge.com get trial here!  
    • Commodities Market Update: Discover the latest trends and strategies for trading in the futures market with a focus on Elliott Wave analysis. Learn about bond yields, USD DXY, and key commodity prices such as gold, silver, copper, iron ore, lithium, uranium, nickel, crude oil, and natural gas. Stay informed and make informed trades with our in-depth market summary and expert trading recommendations. Commodity Market Elliott Wave Update: - Bitcoin: Wave 2 low in place, awaiting confirmation. Support at 65k. - US Dollar: Awaiting more price action. Bonds expected to move higher, yields to lower. - Gold, GDX, and Silver: Possible lows in place, requires confirmation. Silver is looking more positive. - Base Metals: Copper approaching Wave 4 low. - Natural Gas: Wave b) of 4 correction lower. Video Chapters: 00:00 - Bitcoin (BTC) and Ether (ETH/USD)   07:28 - US Dollar Index (DXY) / TLT Bonds / US Gov Bonds 10 Yr Yields   16:51 - Precious Metals: Spot Gold (XAU) / GDX ETF / US Spot Silver (XAG)   27:10 - Base Metals: Uranium (URA ETF) / Copper   29:55 - Energy: Crude Oil (WTI OIL) / Natural Gas (NG)   32:27 - End   Analyst: Peter Mathers, TradingLounge  
    • The cryptocurrency world is being transformed by AI, making investing and asset management easier and more secure. Projects like Fetch.ai, Ocean Protocol, and SingularityNET use AI to analyze market data and predict trends, empowering investors with smart decisions. ROGin AI exemplifies this by providing market analysis and portfolio management tools, automating tasks to save time and reduce errors. AI also boosts security by detecting fraud on crypto platforms. ROGin AI's unique features include social learning and NFT integration, allowing investors to collaborate, get trading advice, and protect their strategies as NFTs. What excites you about AI in crypto? Have you tried any AI-powered crypto projects? What features would you like to see on platforms like ROGin AI?
×
×
  • Create New...
us