New Prime Minister in Australia
The Australian dollar has been in the declining trend for the last 12 months since September 2014. Now it has bounced up from the six-year low reaching a two-week high. This happened due to the political and economic news. Will the Aussie trend change its direction?
The MPs from the ruling Liberal Party of Australia have replaced Prime Minister Tony Abbott with the former Minister of communications and multi-millionaire Malcolm Turnbull, who is the fourth prime minister in the past five years. Mr. Abbott resigned mainly because of the public discontent with his economic policy amid descending commodities prices. The next parliamentary elections in Australia are to take place at the end of the year.
No wonder the Liberal Party is keen to preserve its dominance in the parliament. The new officials are assumed to undertake the measures for supporting the national economy for all the time left. The Prime Minister shift made the Australian currency stronger. The additional positive factor was the release of the Reserve Bank of Australia September meeting minutes early in the morning on Tuesday. According to the document, the fable economic growth of 0.2% in the 2nd quarter is likely to hinder the rate hike from the current 2% for a long time. The RBA cut the key rate twice in 2015, but the risk of its further cut is reduced. The next important macroeconomic data on the Australian real estate market is expected on September 22nd and 30th.
On the daily chart, the AUD/USD has approached the resistance line of the downtrend. It is below the 200-day moving average. The MACD and Parabolic indicators demonstrate signals to buy. The RSI is neutral, being above 50. The Bollinger Bands® have widened significantly which may mean high volatility. A bullish momentum may develop, subject to the Aussie surpassing the last upper fractal of 0.721. This level may serve the point of entry. The preliminary risk limit may be placed below the six-year low, which is the lower fractal as well, and the Parabolic signal of 0.69.
Having opened the delayed order we shall move the stop to the next fractal low following the Parabolic signal every four hours. By doing this we adjust the potential profit/loss ratio in our favour. The most risk-averse traders may switch to the four-hour chart after the trade and place a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level of 0.69 without reaching the order of 0.721, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
- Position: Buy
- Buy Stop: Above 0.721
- Stop-loss: Below 0.69