US Midterms and trade war to drive AUDUSD to our buy limit
Trade set up: We have seen a ‘shooting star’ candle printed on Friday’s daily chart, depicting a potential short-term bearish move in the pair. However, buying the AUDUSD after a retracement into 0.7165 is still our preferred strategy. Given the importance of a three standard deviation move on Friday, our bullish trade is still in play ahead of US Midterm elections.
Why we like it: We can look at a simple regression model drawn from the January high, and if we take the view that this trend is set to continue, then it heightens the risk of a move into 0.7165, although we could also see 0.7140 (one-standard deviation from the line of best fit) come into play.
We had been anticipating USD weakness ahead of the US Midterm elections driven primarily by profit-taking and covering long positions. However, this view may reverse somewhat with Asian equity markets getting sold off fairly aggressively today, thanks largely to comments from Larry Kudlow that a trade deal is seemingly still a big hurdle and this will only accelerate the move into the 0.7165/40 area.
There is plenty of event risk this week to contend with, so it’s worth focusing on AUDUSD one-week volatility and applying this to get the weekly ATM (At The Money) straddle. Here, we see the market priced for an 85-pip move in either direction, so our view is to place stops after entry below Fridays low of 0.7072.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Why we like it: We can look at a simple regression model drawn from the January high, and if we take the view that this trend is set to continue, then it heightens the risk of a move into 0.7165, although we could also see 0.7140 (one-standard deviation from the line of best fit) come into play.
We had been anticipating USD weakness ahead of the US Midterm elections driven primarily by profit-taking and covering long positions. However, this view may reverse somewhat with Asian equity markets getting sold off fairly aggressively today, thanks largely to comments from Larry Kudlow that a trade deal is seemingly still a big hurdle and this will only accelerate the move into the 0.7165/40 area.
There is plenty of event risk this week to contend with, so it’s worth focusing on AUDUSD one-week volatility and applying this to get the weekly ATM (At The Money) straddle. Here, we see the market priced for an 85-pip move in either direction, so our view is to place stops after entry below Fridays low of 0.7072.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Trade active:
Trade is Active, our pending order has triggered and we are looking to hit target 1 shortly.
Trade closed: target reached:
Closed at 0.7300 after reaching the target
Disclaimer:
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment.
