Originally published by AxiTrader
The Australian dollar has had an interesting week.
At 80 cents currently it up a little more than a cent over the course of the week. That's a solid performance and one underpinned by a combination of a weaker US dollar, solid sentiment toward global growth, very positive investor sentiment toward equities in general and US stocks in particular, and a technical ouotlook that fairly screams the path-of-least-resistance is higher.
But, after trading up to a high of 0.8022 on Wednesday night the Aussie then drifted back under the weight of the US dollar recovery from 6am yesterday morning. Incongruously the Aussie then came under pressure again AFTER the very solid employment data for December which was released yesterday around 11.30 am AEDT.
At the time I tweeted, "Tom DeMark says bulls markets don't end with sellers they end with an absence of buyers (he says the reverse for bear markets). Don't want to over-egg this Aussie dip but the price action is interesting".
In terms of support, the Aussie low yesterday around 0.7941 was pretty close to the low of the previous two days. That makes it a very important point to watch with a break likely signaling deeper move lower in the Aussie.
But, as you can see in the daily chart the AUD/USD uptrend, remains both in force and strong, Indeed the current uptrend line comes in around 0.7915/20 while my fast moving average sits around 0.7895/0.7900. It's really only a break of these levels that would turn the outlook.
Does the Aussie need a spike high, an optimistic crescendo, to make a top or will it just grind higher?
Looking at the weekly chart it is clear this 6 week stretch of rallies is the best run the Aussie has had since bottoming back in early 2016. That in itself doesn't mean a decline is imminent. Indeed why wouldn't the Aussie have six good week's of rallies given the current fundamental backdrop globally?
Indeed the weeklies suggest the AUD/USD is simply ratcheting toward the inner channel which sits around the 0.8275 cent region at the moment.
That all ties back to a long list of levels I'm watching for the Aussie as we head into week's end.
- 0.7935/40 (last 3 days low) and 0.8020/25 (recent high and Fibo extension of a previous move) are the big short-term levels on the 4-hour charts.
- The one-hour charts suggest an extra level of interst/support around 0.7980/85 which if broken might see a little press lower.
Medium termish
- 0.7895/0.7915/20 holds the trend support for this overall daily up move. A break could turn the outlook.
- That would put 0.7823 in the frame as the 38.2% retracement of the rally from 75 cents.
- Topside, 0.8087, 138.2% FIbonacci projection of the recent hourly run to last night's high.
- 0.8102, the 20/09/2017 high
- 0.8144, the 2017 high
- AND 0.8270/80 - the inner channel on the weeklies.
Have a great day's trading.