Trade Outlook- 18 August 2023 


Technical Analysis 

From a 4-hour perspective, AUDUSD has broken through the major support level between 0.64600 and 0.64300. This is a bearish signal and suggests that the market could continue to move lower. 

The 10-EMA and 20-EMA have also crossed bearish, which further confirms the downtrend. Additionally, the MACD is currently below the zero line, which is another bearish sign. 

Based on these technical factors, I expect AUDUSD to continue to move lower in the next trading session. 

Fundamental Analysis 

From a fundamental perspective, the Australian dollar (AUD) is likely to remain under pressure in the near term as China’s economy slows. The AUD is closely correlated with the Chinese yuan, and the recent weakness in the yuan has weighed on the AUD. 

The Chinese economy is facing several headwinds, including a slowdown in exports, a property crisis, and rising debt levels. These factors are likely to keep the yuan under pressure, which will in turn weigh on the AUD. 

Overall, the technical and fundamental factors suggest that AUDUSD is likely to continue to move lower in the near term. 

Other supporting data: 

DXM Analysis 

The DXM, or Dump Money Index, is a measure of the number of retail traders who are long or short a particular currency pair. A high DXM reading indicates that there are a lot of retail traders who are long the pair, while a low DXM reading indicates that there are a lot of retail traders who are short the pair. 

In the case of AUDUSD, the DXM is currently at 81%, which means that 81% of retail traders are long the pair. This is a bearish signal, as it suggests that the market is likely to move lower. 

The reason why this is a bearish signal is because 95% of retail traders lose money in the long term. This means that the majority of the people who are long AUDUSD are likely to lose money on their trades. 

Seasonality Analysis

Seasonality analysis is a method of predicting future price movements based on historical data. In the case of AUDUSD, the seasonality analysis suggests that the pair is likely to maintain a bearish trend in the next 40 days. 

This is in line with our bearish view from the fundamental analysis and the technical analysis. However, it is important to keep in mind that seasonality analysis is just a pattern and does not take into account the latest news or developments. As such, it is important to use it in conjunction with other factors when making trading decisions. 

Bank Target 

The chart above shows that Morgan Stanley has a bearish view on AUDUSD. They believe that the pair will trade around 0.62000 by the end of this quarter. This could be a potential target price for traders who are short AUDUSD. 

DISCLAIMER: This report has been prepared by Fairmarkets International (“The Company”). This document is not intended as an offer, solicitation or recommendation to buy or sell financial instruments or to make any investment. The Company has used reasonable efforts to obtain information from reliable sources and the report is provided without representation or warranty of any kind (neither expressed nor implied).  The Company and Fairmarkets International disclaims liability for any publication not being complete, accurate, suitable and relevant for the recipient. Specifically, the Company and Fairmarkets International disclaim liability towards any user and other recipients of this report.