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CNBC NOTES – AUSSIE TESTING UPTREND

  • Daryl Guppy
  • 26 October 2017

The Australian dollar has slipped from a peak of US$0.81 to a low of US$0.79 before developing an uncertain rebound. Can the Australian dollar find genuine support near US$0.71 or is Australian dollar weakness going to continue to develop? This is the first question traders are asking. Alternatively, is the underlying uptrend strength solid enough to develop a sustainable rebound and breakout above resistance near US$0.81? This is the second question, usually asked by investors with a longer term view of the market.

It’s difficult to ignore the performance of the US dollar as the Aussie strength is often a direct consequence of weakness in the US dollar which has plunged to $0.91 on the dollar index chart. The mild US dollar recovery to $0.93 has coincided with the weakness in the Australian dollar.

Although the Australian dollar may be driven by the strength of the USD it’s the behaviour of the AUD that sets the breakout targets.

The key part of the answer to both questions is the strength of support near US$0.77 and the strength of the uptrend as  revealed by the Guppy Multiple Moving Average indicator.

We use Guppy Multiple Moving Averages  indicator analysis to identify trend strength and trend changes.   Trend confirmation comes when the long term GMMA is well separated because this shows the investors are confident of trend continuation. Currently the long term GMMA has the greatest degree of separation it has shown in 12 months. After a prolonged period where the long term GMMA separation was very narrow the GMMA has moved upwards and developed good separation. This usually indicates solid trending behavior.

The Australian dollar is testing long term support near US$0.77. This was a strong resistance level from 2016 April until 2017 July. This suggests this level can provide a strong support feature.

The combination of this strong support feature and the good separation in the  long term GMMA suggest the Australian dollar will rebound and retest the resistance highs near US$0.81.

However, given the historical relationship between the Australian and US dollars this rally is likely to be temporary as the US dollar also develops a rebound. The Australian and US dollars have an inverse relationship that is led by the US dollar. US dollar weakness lifts the Australian dollar. Ultimately US dollar strength will translate into Australian dollar weakness.

This suggests Australian dollar rebound rally strength is temporary unless the US dollar resumes its downward trend. Technically the Australian dollar is poised for a rebound but this rebound is threatened by the potential for the US dollar to move above $0.93.

We use the ANTSSYStrade and analysis method to identify the opportunities as the trend develops. A sustained rebound above US$0.77 is a signal for trend continuation towards  US$0.81.


About the Author
Daryl Guppy (Australia)
Known as the “CNBC Chartman”, Technical Analysis Expert, International Investment Master, Daryl is an active private position trader trading equities and associated derivatives markets.

Daryl Guppy is Founder and Director of Guppytraders.com Pty Ltd. He is an active private position trader trading equities and associated derivatives markets. His most recent book is ‘The 36 Strategies of the Chinese for Financial Traders’. He is the author of several books including ‘Share Trading’, ‘Trading Tactics’, ‘Bear Trading’, ‘Chart Trading’, ‘Trading Asian Shares’, ‘Market Trading Tactics’, ‘Better Trading’, ‘Better Stock Trading’, ‘Snapshot Trading’. Several of these books are also available in Chinese & Italian, in particular, ‘Trend Trading’ has become a best seller and is available in Chinese.

Daryl developed the Guppy Multiple Moving Average indicator which is included in DZHI Advisor, Metastock, OmniTrader and other charting programs. He delivers accredited courses for the Singapore Exchange and Society of Remisiers, Singapore. He is an appointed foundation member of the Australian Government Shareholders and Investors Advisory Council. He is a regular technical analyst commentator and guest host on CNBC Asia Squawk Box.

As a technical trader, he relies mainly on chart and live market information to make trading decisions. He is the publisher of a weekly Internet newsletter Tutorials in Applied Technical Analysis, which explains technical analysis techniques and shows how they are applied to current markets. There are Australian, Asia, China and India editions of the newsletter, with each concentrating on local market solutions and trading education.

He is a regular contributor to the Sydney Futures Exchange magazine - Your Trading Edge, the US trading magazines - Technical Analysis of Stocks and Commodities, Active Trader, Working Money, Bridge Trader, Australia's Shares and Personal Investment magazines, Singapore's Smart Investor magazine and The Edge business weekly and Personal Money in Malaysia. He has a regular column in China's Weekly on Stocks magazine and in Shanghai Securities News. He also contributes to Poland's Professional Investor and provided sector analysis on the Singapore, Hong Kong, Malaysia and Philippines markets for i-invest handbooks.

He edited and contributed new material to the Australian editions of the US classics in the International Investors Bookshelf series, The Basics of Speculating and Day Trader's Advantage and Options: Trading Strategies That Work and Trading Rules and Mastering Technical Analysis. He prepared the introduction to the Australian editions of Breaking the Black Box (M Pring), A Technician's Guide to Day Trading (M Pring) and New Thinking in Technical Analysis (R Bensignor).

He provides web content to Sanford online brokerage, Reuters, On Line Trading systems, the Society of Remisiers, Singapore, Asiastockwatch, Telstra Big Pond Money and Quicken, Singapore. He provides charting chat room support and is co-host for the stockmeetingplace traders forum.

He trades from Darwin in the Northern Territory, of Australia, some 3,000kms from the nearest Exchange. As a result he makes full use of electronic advantages to actively trade the market and to keep in contact with other Australian and overseas traders.

He gives conference briefings for brokerage private clients. He is a featured speaker at the Australian Traders Expo, for the Sydney Futures Exchange Conference days around Australia and New Zealand, and at the Australian Technical Analysts Association annual national conferences. He was one of the speakers in the first Australian Equis Metastock seminar series. He also spoke at the On Line Trading Summit in San Diego which was webcast to traders throughout the world, and at the Technical Analysis Trading Forum in Orlando. He has spoken at trading conferences in Italy and France. He has also spoken frequently at all the major Australian Stock Exchanges, and for brokerage firms.

He was one of two foreigners (Jim Rogers and Daryl Guppy) to participate in the 2005 Chinese market outlook conference in Beijing which was broadcast throughout China. He is a keynote speaker at the 2007 China Capital Markets Investment Forum. His analysis has been presented at the 2005 Palm Oil Outlook conference sponsored by Bursa Malaysia and the BYSD Annual conference in Turkey. He is a regular speaker at the annual ASEAN Rubber Conference and at financial trading seminars in Shanghai, Beijing and Shenzhen.

He presents Certified Professional Training modules for charting and advanced technical analysis for the Singapore Stock Exchange and the Society of Remisiers, Singapore and the Hong Kong Securities Institute. He has worked with the Singapore and Australian Stock Exchanges to promote their cross trading link. He worked with Reuters Hong Kong to deliver trading and training workshops. He was the lecturer for the Casuarina Senior College charting course.

He also runs public trading workshops, and equity and futures brokerage sponsored seminars for clients such as National On Line trading, CMC Markets, Beijing SEEC in Australia, Kuala Lumpur, Singapore, Shanghai, Dalian and Paris. He provides in-house training support for fund managers, brokerage dealers and remisiers.

He presented several on-line workshop conferences for Pristine.com and Compuserve Investors Forum. He has appears regularly on CNBC Asia, Squawk Box as guest host technical analyst, Asian Wall Street Journal, Trading Day, Channel News Asia and ABC radio and television.

He was retained as a consultant by several Australian and Singaporean brokerages and financial portals to advise on the development of Internet based brokerage, trading and information services. He is a member of the Australian Technical Analysts Association, the Technical Analysts Society of Singapore and the International Federation of Technical Analysts.


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