Australian Greenback Outlook:
The Australian Greenback might take pleasure in a bullish enhance from enhancing US-China commerce relations Nonetheless, topside resistance is plentiful, and the technical limitations will look to maintain a lid on AUDUSD featuresWith the unsure backdrop, IG Consumer Sentiment Information might present the affirmation wanted to set off an entry
Australian Greenback Outlook: Awaiting Bullish Affirmation from Consumer Sentiment
The Australian Greenback has loved a rebound off assist since early October and has just lately been gifted one other bullish driver with the enchancment in US-China commerce relations. Given the Australian economic system’s relationship with China, any indication that the outlook for Chinese language financial development is enhancing may translate to greater Australian exports, due to this fact buoying the economic system and doubtlessly leading to a extra hawkish RBA. Whereas the basic panorama seems to be shifting within the Australian Greenback’s favor, there are nonetheless concerns available.
AUDUSD Worth Chart: 1 – Hour Time Body (October – November) (Chart 1)
The primary of which is the simultaneous affect on the US Greenback. A tangible enchancment within the US-China commerce warfare can be considered as a optimistic growth for the US economic system – as a key headwind is decreased. In flip, the Fed might grow to be extra hawkish because the case for additional charge cuts weakens and the US Greenback is strengthened. Thus, AUD bulls must hope the resultant affect on the Australian economic system outpaces that of the US economic system – permitting for AUDUSD to climb.
AUDUSD Worth Chart: Day by day Time Body (October – November) (Chart 2)
The second and extra seen concern is close by technical resistance. Persevering with its rally from assist round zero.67, AUDUSD is quick approaching a convergence of topside limitations. Most notably, the 200-day easy shifting common, which resides narrowly above the buying and selling value on the time of posting. Secondarily, a descending trendline from December 2018 will look to align with horizontal resistance from July to maintain AUDUSD in examine. Collectively, the three technical limitations will look to supply a formidable protection – however may additionally present assist within the occasion they’re surmounted.
With legitimate arguments on both aspect of the Australian Greenback’s outlook, it could show clever to await a bullish affirmation from IG Consumer Sentiment Information. Because it stands, bulls and bears are successfully deadlocked – delivering an all-too-familiar combined sign on AUDUSD. Nonetheless, if retail merchants look to extend their brief publicity round this space of confluent resistance and outpace bullish curiosity, the contrarian nature of the information may sign a bigger uptrend is because of emerge. Such a pattern would supply a continuation from the October lows.
With that in thoughts, preliminary areas of curiosity to the topside will reside round zero.70. The extent has confirmed its capacity to affect value previously and it could look to take action once more. Ought to the pair stall at this stage, it could sign the highest of a false breakout. Thus, surpassing this stage would quantity to a really encouraging growth for AUDUSD.
Alternatively, an space of invalidation for the commerce will reside close to the pair’s 2016 low at zero.6827. A break beneath this space may recommend AUDUSD is destined for an additional retest of assist round zero.67 and would erode a bullish outlook within the shorter-term.
In summation, AUDUSD appears to be perched on a knife’s edge and IG Consumer Sentiment knowledge may present the deciding affirmation for a bullish continuation greater if brief curiosity can outpace bullish publicity. To study extra about retail knowledge and learn how to incorporate it into your buying and selling technique, join my weekly walkthrough webinar. Whereas retail purchasers battle it out and I await affirmation, observe me on Twitter @PeterHanksFX for additional updates and evaluation.
–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and observe Peter on Twitter @PeterHanksFX