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AUDUSD Forex Analysis

Updated: Aug 30

To analyse this major pair, a good insight for the U.S. Dollar should be available as that is more actively traded and will be an influence on the forecast for AUDUSD.

To determine the Risk On or Risk Off scenarios for the USD against the AUD, we'll be looking at the price charts and the macro fundamental economics in play behind the scene.

Quick summary of the technical charts for AUDUSD, real-time economic Fundamentals Scores from the 1% Trading Group website, and general market sentiment using COT data will all be used as a gauge to draw our bias in this reading.

AUDUSD Daily Analysis

We see that the market is in a Redistribution or Accumulation phase to fall further or rise higher into the previous Distribution zone, and the same opposite setup can be seen for the Dollar Index.

Targets after a clear breakout through the range of 0.74636 - 0.76160 will be the pockets of liquidity seen on the volume profile chart below.

AUDUSD Daily Analysis

Depending on what side between Demand and Supply is providing or taking Liquidity, the side doing the absorption will push the price into a new direction. Therefore we can surely highlight that the market is positioning for a move.

The question now is, "what side is doing the absorption?" We'll get better insight and derive a bias from our Fundamental Analysis overlayed with the technicals.

AUDUSD Fundamental Differentials - 1% Trading Group Dashboard

The components are seen in the image above and what they suggest:

  • Relative GDP - AUD stronger than USD by 1.9% and this would suggest a buy of AUDUSD.

  • IR Rate - This shows that USD will have better output or earning potential from investors which their action would lead to the strengthening of the USD over AUD by 0.06%.

  • Relative Wealth - AUD stronger than USD by 2.48% in terms of relative wealth. This would suggest a buy of the AUDUSD.

  • COT Data - Shows gradual shift by smart money investing into AUD while reducing their interest on USD.

Evident through observing the overlaid flip data between USD and AUD, note the gradual contraction defining less interest in the USD and a rising interest in the AUD.

AUDUSD Long Term Macro Chart Summary - 1% Trading Group Dashboard

The overall fundamental score shows a higher score for USD at +48 which is seen to be dropping from a score of +50 above.

A rapidly rising score for AUD from +13 to present +24 suggests the contraction and expansion in the economy between USD and AUD.

The interpretation of this data indicates that:

USD has been experiencing inflation in its economy, and it might be too much (hyperinflation) as the numbers show.

Ideally, this would call for the response of the Feds to act and impose policy/measures that would reversibly lead to deflation and cooling of the economy.

With the slight recent drop in score, one can presume that there’s been a transitioning of the USD from peak inflation into new deflation conditions.

While AUD is recovering from deflation into new inflation, there's still more upside potential for growth before the need for the government or central bank to turn things around.

Knowing that we aim to buy into rapidly increasing inflation and short deflation, we’d lean towards viewing the present range in our technical analysis as an Accumulation Wyckoff schematics.

In summary, long term we're most likely to Short the USD and Long the AUD.

To catch the time right of when the move will initiate, we'll watch the technicals anticipating a breakout and see the price response at those points.

While also checking the fundamental components listed, we'll focus on the COT Data to optionally give the last clue as to when an initiative of smart money is taken to have more open interests (over time) in the side of price direction, especially at the breakout.

AUDUSD 4 Hour Chart Showing Wyckoff Re-distribution and Accumulation Schematics

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