LEARN HOW TO SWING TRADE THE AUSSIE DOLLAR
All regular readers of our blog, you will know exactly what we look for before entering a position in the market and the reasons behind it. If you are new to this page please take the time to check out our trading methodology and strategies page as this will give you a clear insight into our forex strategies.
THE AUSSIE LTA TRADE
Before we present any charts or reasons for this trade idea, we want you to understand that is important to know the market you are going to be trading. Therefore, you need to have an idea of what is going on in the economies of the countries of the currency pair you are going to trade. We call that studying the Fundamentals of a market.
In this particular case, we will talk about the AUD/USD and that should lead us to study two economies:
THE AUSTRALIAN ECONOMY
The Australian economy has experienced steady growth and enjoys low unemployment, contained inflation, very low public debt and a robust and established financial system. With an average growth of 3.5% per year, by 2012, Australia had experienced more than 20 years of continued economic expansion.
Demand from Asia
Demand for resources and energy from Asia, in special from China, has grown rapidly, creating a channel for resources investments and growth in commodity exports. The high Australian dollar has hurt the manufacturing sector, while the services sector is the largest part of the Australian economy, accounting for about 70% of GDP and 75% of jobs.
Australia and the global financial crisis
Australia was practically not affected by the global financial crisis as the banking system has remained strong and inflation is under control. Australia has been highly favoured from a sudden surge in its terms of trade in recent years, originated from rising global commodity prices. The country is a significant exporter of natural resources, energy, food and its abundant and diverse natural resources attract high levels of foreign investment including extensive reserves of coal, iron, copper, gold, natural gas, uranium and renewable energy sources.
Let’s us show you, as an example, how the Australian labour market has been performing in the past few months:
Australia’s Employment Change:
Date Actual Forecast Previous
17/08/2017 27.9k 19.8k 38.0k
20/07/2017 14.0k 14.4k 38.0k
15/06/2017 42.0k 9.7k 46.1k
18/05/2017 37.4k 4.5k 60.0k
13/04/2017 60.9k 20.3k 2.8k
This indicator measures the change in the number of employed people during the previous month and traders are particularly interested in it because job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
As we can clearly observe, jobs creation in the Aussie Economy has been thriving lately with the actual figures released 2 and even 3 times more than the forecasted figure. That is sign of a very strong and stable economy.
THE UNITED STATES ECONOMY
Well, what can we say about the most powerful economy on earth?
We started 2017 with signs of a very a promising year for the US and for the Dollar. Surprisingly, the Trump effect after the elections was somehow unexpected and it looks like the euphoria has now passed.
The overall picture for economic growth is well short of 4% which was the promise Trump made as a candidate, but it is getting closer to the moderate goal of 3% that he has set since taking office.
Trump’s election and promises of massive tax cuts and infrastructure spending lifted expectations on Wall Street and among economists of faster growth. However, he has not been able to get his economic agenda through Congress. That means those expectations have been adjusted.
Just last month, the International Monetary Fund (IMF) lowered its U.S. growth forecast for this year and next because of “uncertainty” over the timing and size of Trump’s policies and the U.S. Dollar, which rallied after the election, has retreated sharply in recent months.
The Dollar Index
The Dollar Index, which measures the value of the US Dollar relative to a basket of foreign currencies, has dropped a staggering 1000 points and is trading at levels seen back in May/2016 when the actual rally, which culminated in the Trump Election bull run, started. The fate of the US Dollar is being decided as we speak. At these level, the Index is
At these level, the Index is a critical point and a breakout will set some momentum to the market which will mean money to those who know how, when and which market to trade.
THE FUNDAMENTAL VERDICT
Now you are asking yourself, where are we going with all of that?
If you pay attention to the message here, we have a Fundamental diversion. US economy retreating and Australian economy thriving. Buy the Australian Dollars and Sell US Dollars. That is the message presented to us, to make it simple buy AUD/USD.
Believe it or not, technicals are the easiest part of trading and the one I enjoy the most.
Let’s show you these 2 charts of the Aussie with the Platinum Technical Analysis:
From the charts above we can see that Aussie has finally managed to break out its multi-year trade range (Ascending Triangle) and is now set into a Bullish momentum move. This is a buy and hold trade. It has potential to make 100’s of pips if you learn the concept of buying and holding.
Find out how Platinum Traders will trade the Aussie!
KEY TECHNICAL LEVELS ON AUSSIE:
- 8065 – Short Term Selling level
- 7715 – Long Term Buying Level
- 7160 – Short Term Buying Level
- 7615 – Long Term Buying Level
- 7505 – Short Term Buying Level
- 7375 – Short Term Buying Level
How to become a profitable Aussie Trader.
By any chance, if you are a new trader and would like to learn how to trade, then sign up today to our 2-day free Foundation to Forex Trading Course. We have just introduced this as in the last month we have had a lot of inquiries on learning how to trade the financial markets. We can get you on the successful path of becoming a Financial Trader.
Hopefully, you have enjoyed today’s article as much as I have enjoyed writing it and have gained great knowledge about trading and how to trade.
See you soon!
The Platinum Formula:
Perfect Fundamentals + Perfect Technical Analysis + Perfect Logic + Perfect Risk Management = Perfect Trade
THE PLATINUM WAY
At Platinum, we teach all individuals from different walks of life to become a full-time trader or create a secondary revenue stream by trading part-time. We trade in an Institutional Way by letting the market come to us and being patient. Using Platinums Trading system you can take many Pips out of the market. We can ensure using this style of trading your trading will make a turnaround as you will become much more consistent.
If you want to trade like the professionals do, making consistently profitable returns from your trading, get in touch with us and we will demonstrate live exactly how we approach the markets.
Hopefully, you have enjoyed today’s article. Thanks for reading!
Have a fantastic day!
Live from the Platinum Trading Floor.
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The information you’ll find in this article is for educational purpose only. We make no promise or guarantee of income or earnings. You have to do some work, use your best judgement and perform due diligence before using the information in this article. Your success is still up to you. Nothing in this article is intended to be professional, legal, financial and/or accounting advice. Always seek competent advice from professionals in these matters. If you break the city or other local laws, we will not be held liable for any damages you incur.