Technicals | Mar 10 2017
Bottom Line 8/3/17
Daily Trend: Down
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 75.20 / 73.60 / 71.40
Resistance Levels: 78.40 / 80.00 / 81.60 / 83.00
Technical Discussion
We continue to see potential in the Australian Dollar even though this larger sideways consolidation phase has dragged out longer than expected. If price is to have bullish intentions, then the upward move we have been witnessing here recently has to continue to make progress. A dip is ok and will also be seen as healthy, yet it has to stick within the expected pull back zone which is talked about more in our technical section tonight. The RBA left our interest rates on hold this week yet the reactionary move higher in the Aussie hasn't stuck to this point. U.S non payrolls are out on Friday and are expected to be strong and therefore likely to seal the deal on a U.S rate hike in March. Chinese trade figures for February are also due out and if they are strong it could well keep our currency on the bid, be it weakening commodity prices may well prove problematic. Always a juggling act when it comes to the fundamental influences that affect the Australian Dollar !
Reasons to stay cautious:
→ Inflation remains in check in Australia (yet watching)
→ unemployment data being monitored
→ Further interest rate cuts still possible
→ strong support zone 67.00 – 68.00 continues to hold
→ strong Iron Ore keeping price robust
'Post the flatter (a)-(b)-(c) consolidation phase completing, price action off the late December lows has been impulsive to the upside and this one single factor continues to keep our positive rhetoric in place on the currency.' This is all well and good for now, yet we are going to know a lot more on whether price is going to continue to rise or not, depending on how it performs and evolves during this immediate consolidation phase. If the 50.0% – 61.8% retracement zone circa 74.45 and 73.60 respectively can hold, yet even better bring out strong buying when tagged, then we will continue to look favorably on the currency at least over the short to medium term. If 73.60 is broken below though and the move sticks, then our bullish bets will be well and truly off the table again. 78.40 is the key number for an upside move triggering. If this can be achieved then targets align 82.00 as a minimum. Time to let price lead the way and inform us of its intentions !
Trading Strategy
The dip we are looking for, if it does transpire, may provide us with an opportunity to swing trade the Australian Dollar on the long side from within the 73.60 – 74.45 price zone over the coming weeks. This will be the aggressive play yet we need the technicals to align nicely before simply just jumping on board. Any break below 73.60 though and all bullish bets are off. Further patience required.
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