AUDUSD keeps the bullish run alive. What would derail the run?

Technical Analysis

Author: Greg Michalowski | audusd

The fundamental numbers and technicals remain supportive.

In Australia this week:
  • New motor vehicle sales increased by 4.5%
  • Westpac consumer sentiment increased by 1.8%
  • Home loans increased by 2.1%
  • Inflation expectations remained at 3.7%
  • HIA new home sales rose by 0.7%
  • Employment change added 34.7K new jobs after an oversized 63.6K in the prior month
That seems like a pretty good week from an economic standpoint.

The price moved higher. I can't say that the rise was not accompanied by some up and down price action.  

However, technically while choppy at times, the bulls remained in control. 

Looking at the hourly chart, the choppiness is coming from a pretty good topside channel trend line on the hourly chart. Looking at the hourly chart above, the price moved up to the topside trend line on Wednesday and found sellers. Today, the price moved back up toward the line and stalled again (the high today reached 0.8038 with the trend line at 0.8041).  The bias is bullish, but the traders are leaning against the ceiling from the trend line.  Risk can be defined and limited against the level.

The good news for the buyer (and perhaps for the sellers against the extremes), is that the falls have been limited AND have also stalled at technical levels.

ON Tuesday, the fall stalled near a corrective low from Monday at 0.79395 area.  The lowest low reached 0.79361. On Thursday, that floor level, and the rising 100 hour MA (blue line) stalled the fall.  The low reached 0.7941 on Thursday before rotating back higher and stalling at the high of 0.8038 today. 

So what is up for next week?

Well, if the technical picture ain't broke, don't mess with it. 

On the downside, the 100 hour MA at 0.7978 will be eyed as close support.   Stay above, and the step higher can continue.  

On the the topside, the topside channel trend line should stall the rallies. That trend line comes in at 0.8043 and moving higher. 

When the technical levels are defining the ceiling and the floor, traders will lean against those levels on tests. They will also use them on a break should the levels be taken out. 

On a break to the downside, the the next key levels to target will be the 0.79395 floor from this week, and then the 200 hour MA (green MA line) and the lower channel trend line. Both of those technical levels come in at 0.7925 area (and moving higher).  

Like the 100 hour MA, I would expect buyers to lean against those level on the first test, with stops on a break.    
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