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John J Hardy
In this latest webinar, Saxo Bank's head of FX strategy John Hardy analyses the market with topics including synchronised global growth, Saxo’s global risk indicator and data surprises.
Strategic trade
Trade view / 25 August 2016 at 7:39 GMT

Mild bullish bias in AUDUSD offers long-term goal

Analyst / PIA First
United Kingdom
Instrument: AUDUSD
Price target:
Market price:

USD Index – We did break above the triangle top (trend of lower highs) but gains were sold into for the index to close the day back inside. This does not give much clarity on what to expect over the next two days but USD majors, we think, still hold a marginal USD bearish bias. These are all high-risk trades but they do offer the best risk/reward if caught properly. 
USD Index
 Source: Saxo Bank

I have taken a long AUDUSD position and here is why: 

Monthly – Long timeframes offer an eventual bearish bias but a break of 0.7000 (area) would be needed to take the pair lower. Considering we have had a period of 12 months with little relative net movement, this could be a way off. The 0.8000 area is off note to the upside as, not only is it a Big Figure, but it's also an area that has been pivotal. Elliott wave would dictate that we are in a 4th wave correction. 
Source: Saxo Bank

Weekly – Highlights the pair in a corrective channel formation. Although we did reject gains at the 38.2% pullback level of the last wave at 0.7849 (common Fibonacci level) the losses were not sustained. In fact, a full AB=CD formation takes the pair to the 50% pullback level of 0.8165. This is our prime medium-term focus. As long as 0.8658 (swing low) is not breached then the long-term outlook (monthly chart) holds an eventual bearish bias. 
Source: Saxo Bank

Daily – Shows a prolonged period of consolidation (12 days if spikes and Dojis) as we run into this major news event. Trend line support is seen at 0.7550 with levels below used as a stop. 
Source: Saxo Bank

Intraday (four hours) – This timeframe highlights the twelve days of consolidation forming an Expanding Wedge pattern. This pattern has an eventual bias to break higher. Lower trendline support is seen at 0.7544. 
 Source: Saxo Bank

Management and risk description

There are two possible trades in play here, intraday and medium term.


Entry: Long at 0.7624

Stop: medium term stop 0.7540 - intraday stop 0.7590

Target: intraday 0.7735 (channel top) or 0.7770 - medium term 0.8150

Time horizon: Strategic

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
Rofhiwa Thomoli Rofhiwa Thomoli
Ian, let me try this trade.
Soleri1 Soleri1
Hello Ian. Is this signal still valid?
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
yes ... all signals are high risk going into this key event
ElGusti ElGusti
Hi Ian, is this trade still valid?


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