AUD: Short Term Upside

Technicals | Nov 15 2018

Bottom Line 14/11/18

Daily Trend: Neutral
Weekly Trend: Neutral
Monthly Trend: Down
Support Levels: 70.00 / 68.24 / 62.45 / 60.04
Resistance Levels: 73.14 / 73.81 / 74.84

Technical Discussion

'The AUD/USD has caught a bid recently yet as can be seen on our chart tonight the bears are still well and truly in control.' This still remains the case, yet if price is going to set sail on some form of run higher, even just on a shorter term basis, then right here is where it needs to start that process. Surprisingly with everything that is going on in global markets at the moment, the RBA last week did have a somewhat Hawkish tone to their rhetoric be it any rate hikes appear to be not be coming until the better side of 2019 is completed or even into the early stages of 2020. Outside individual reporting, overall there does appear to be a continued uptick in employment with the unemployment rate slowly lowering. So if this trend continues over the longer term, an uptick in wage growth may start being seen which will be a sign that our economy is consistently growing, be it at a somewhat grinding pace. This is something the RBA does pay close attention to though in regards to interests rates, and any hints of interest rates being hiked at any stage is going to start putting the AUD/USD on the bid which it hasn't been for some time. 

Reasons for caution (officially bullish only above 81.60 resistance):
→ Inflation remains in check in Australia yet being monitored quarterly 
→ unemployment data being monitored / wages growth still weak for now
→ Lowering interest rate cycle appears to have run its course ?
→ strong support zone 60.00 – 70.00 remains robust

'Our eyes have been purely focused on the bearish lowering channel that has been dominating the chart since the beginning of 2018. The move has been relentless to the downside off the 81.35 highs ……' The change that has occurred since our last year is that price has now broken out of this bearish lowering channel. This is a positive, yet only if the retest that is presently going on at the channels upper boundaries and the support zone, can succeed. Tuesday night price tagged an intraday low of 71.61 and ideally this price zone is as low as it goes, with price now attempting a higher swing low pattern by breaking above 73.02. This would be a signal for some short term upside momentum to gather up towards 74.50 which is where the 200 day moving presently resides. Only a convicted move above here would then have us suggesting that we may have finally locked in a major low point recently at 70.18. It needs to be noted as well that just for the moment we are only talking short to medium term time frames. We continue to remain neutral in regards to the longer term outlook for now. 

Trading Strategy

In between reviews we offered up an aggressive trading opportunity on the long side at 71.07 with stops nice and tight at 70.17. So a very low risk trade. Since then price has moved in our favour so we have responded by lowering our risk with our stop now at break even. Always a nice position to be in managing a technical free trade. Obviously the higher swing low pattern is what we are now looking for to potentially start locking in some early profits. Plenty of work still to do though.

Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).

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