By Chloe Edwards, Trade With Precision

The value of the Aussie dollar (AUD) has been rising steadily since mid-March, yielding some long swing trading opportunities. The possible reasons for the strength in the currency could be due to the country’s relatively good response to the Coronavirus crisis or the perception that our economy is doing better than the US economy. It could also be down to the high positive correlation between AUD and gold, which has also been performing well.

Since the uptrend on AUD/USD has been running for some time and there is continued uncertainty in the markets, I am keeping risk management at the forefront of my mind, while continuing to look for opportunities to take advantage of the bull trend. I will be holding long swing trading positions as well as looking for potential opportunities to scale in on the lower timeframes.

On the daily chart, I can see an uptrend in place, with price action forming higher highs and higher lows, and the 10, 20, 50 and 200 moving averages (MAs) showing good bullish geometry. This price action suggests to me the potential for possible long swing trading opportunities.

However there is a strong horizontal level of potential resistance at 0.7330 (shown in red). Ideally, I would like to see this level broken to the upside before continuing to look for long trades. I will be waiting for a pullback into this area as well as the 10 and 20 MAs. I will then look for a small bullish bar to form around this area, and if this happens, I will use it as the basis for a long entry.

If I await this pullback, it looks likely that there could be a decent reward to risk potential for the trade, since the next two major levels of resistance are well above at 0.7730 and 0.7960, as shown on the weekly chart below.

In order to gain a potentially even better reward to risk trade, I am also looking down to the four-hourly timeframe (below). I notice bullish geometry of the MAs and overall bullish convergence of the momentum indicators. The RSI looks to be weakening, but since I will be waiting for the level at 0.7330 to break before looking for an entry (thus re-establishing higher highs and higher lows in price action), I will be also looking for bullish convergence to resume at this point.

Stay safe and healthy, and happy trading.


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CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.