Chart of the Day AUDUSD
AUDUSD Potential Reversal Zone - Probable Price Path
AUD: Australia’s response to Covid-19 has been exceptional among G10 countries and this is helping the AUD bounce back from the pandemic. China’s fast recovery from the virus and the US’s poor handling of Covid-19 has added to the AUD’s outperformance. Australia’s exposure to the relatively stronger economic recoveries from Covid-19 in Asia will continue to support the AUD in 2021. A high level of domestic household debt is a risk for the AUD when fiscal support for the economy is wound back and loan repayment holidays end. US-China trade tensions are also a downside risk. The Reserve Bank of Australia (RBA) will be releasing minutes to the October meeting on Tuesday. The Australian economic docket is otherwise relatively quiet with focus on the preliminary CBA PMI readings for October, due on Friday.
USD: US retail sales data were better than expected. After the dollar index fell by nearly 0.4% in the early part of last Friday, the closing decline narrowed to 0.2% to 93.7, rebounding 0.7% on a weekly basis, ending the two-week decline. The U.S. 10-year Treasury bill's yield rose by 1 basis point to close at 0.75%, and fell nearly 3 basis points on a weekly basis. US retail sales in September increased by 1.9% month-on-month, the largest increase in the past three months, higher than market expectations of 0.8% growth; in October, the University of Michigan consumer confidence index rebounded to a seven-month high of 81.2, which was also better than market expectations; September Industrial production fell short of market expectations, falling by 0.6% month-on-month, contracting again since April. House Speaker Pelosi believes that it is still possible to reach a consensus on a new round of stimulus before the election, and Tuesday will be the deadline for negotiations with the White House. White House Chief Economic Adviser Kudlow reiterated that President Trump still wants to implement the plan, but thinks it is difficult for members of Congress to implement the agreement before the election.The U.S. Department of the Treasury announced that the budget deficit for the fiscal year ending September was $3.1 trillion, the largest deficit in history.
From a technical and trading perspective, the AUDUSD H1 intraday chart is developing an impulsive decline from the previously highlighted .7240 resistance area. Today bears will be watching for a move to test .7120 this area represents the descending trendline resistance, 50% retracement of the last leg lower along with the daily R3 and weekly pivot, watch for bearish reversal patterns here to extend short exposure targeting an ideal .7020 test before a more meaningful correction will likely develop.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!