The Aussie dollar has weakened considerably across the board, supported by a dovish RBA that is perpetually concerned with the high exchange rate, especially against the US Dollar. Looking to the cross pairs, AUDCHF presents a good opportunity to buy the dips as it slowly builds up momentum for its long term rally, that could well ensue into next year.
The first chart below is that of the AUDCHF Renko chart, 30 pips fixed box size. This chart presents a rather short term/interim outlook on the AUDCHF and forms the basis of the larger analysis for this pair
In the chart, we notice a bearish divergence as price made a higher high with RSI making a lower high. After topping out at 0.8669, AUDCHF eventually started its corrective move towards the downside target of 0.8279 is yet to be achieved for this correction to be completed. The bullish price action could see a small rally towards 0.8399 for an eventual decline towards the corrective target of .8279 levels.
Of importance is the next level at 0.8159 which if it sees a close lower could result in an invalidation of this analysis and could pave way for further declines and would put the correction at the risk of further declines.
The next chart below is that of the 60 Pip AUDCHF fixed Renko chart. Here, we get to see the bigger picture. Of importance here is the bullish divergence that we see in relation to the lows. Te RSI makes a higher lows while price continued to make lower lows, indicative of an impending price action. eventually, price rallied to the previous higher low of 0.8579.
Also on the chart, I have plotted what seems to be a Cup n’ Handle pattern which is synonymous to a bullish break out. This pattern gives an upside target towards 0.9539.
Trading the AUDCHF for the Long Term
There are many possible ways that include both an aggressive as well as a conservative trading strategy. Ideally, i’d be looking to buy at 0.8279 with a relatively small position while keeping the stops just below 0.8099 with an upside target to 0.95 (rounded off). If price continues to progress higher and break the resistance at 0.8699, i’d be looking to buy more at this level while setting the stop loss to previous entry price of 0.8279 (with the previous trade at break-even).
The AUDCHF trade idea if all goes to plan can be a very long term trading strategy and I foresee an average holding time of at least until Q2 of 2015.