Chart Watchlist Review

As the year is ending, markets have gone quiet and trading is advised due to the lack of liquidity. Nevertheless, I do have a few currency pairs I am looking out for as trading volume resumes.

AUDUSD has been in a counter-trend move since September, 2015. An early indication that selling pressure is dying down is by fractal counting.

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AUDUSD 1-Day

As you can see, this pair failed to make lower lows from September and onwards. I currently believe it is too early to tell if this trend is over, but I highly doubt it. From my moving average settings, they have converged with the 60-period meeting the 120-period. This is the first indication that we may be looking at an upwards wedge breakout. I still remain bearish over the long term. Why?

Given that Australia is major commodities exporter and gold has taken a hit, the upside remain very limited for the Australian Dollar.

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AUDUSD vs. Gold

If we were to compare the performance of gold against on the weekly chart, there has been a strong correlation and leading indication showing how gold projects the Australian Dollar’s next move.

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AUDUSD vs. Gold

As you can see, gold has been an early predictor for every major move for the Australian Dollar. Gold tends to rally a few days before that of AUD and the recent lift-off in gold is giving the Australian Dollar the wedge that it is trading in right now. My current trading plan is to buy into the upwards wedge breakout, but I will resume my long term short position at a higher, optimal price.

EURJPY is another pair I have been watching from a technical standpoint. I actually have a short position open already before the holidays and kept it open to collect swaps.

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EURJPY 1-Day

Aside from the downwards trend-line, this pair has been playing off of a key demand zone that was recently broken in November, 2015. Aside from a bit of fundamental news, it was unsustained and so the outlook remains bearish. Currently, this trade is setup with a trailing stop loss despite given the previous recent low sat in mid-April at the 126~ price level.

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