Near-term bias favours buyers more still
The high yesterday was 0.7440 which is just shy of last week's high @ 0.7441 but I reckon that still counts as a test of the latter high. The pair moved lower in overnight trading but the dip was bought up as buyers leaned on the 23.6 retracement level of the latest swing higher @ 0.7318 for support.
That has seen the pair continue the momentum higher in trading today, also buoyed by the fact that Chinese trade data earlier showed better-than-expected exports and imports - an encouraging sign for Australian trade as well.
Price now trades near the highs for the day although the range remains narrow - only 18 pips. But the fact that buyers are leaning on the first line of support to bid up the pair is a sign that they are poised to attempt another test of last week's high @ 0.7441.
Further support levels are seen from the upwards trendline which now sits around 0.7410 followed by the 38.2 retracement level @ 0.7405 and the 200-hour MA (blue line) @ 0.7400. Following that, there is added support in the 50.0 retracement level @ 0.7394 and the 100-hour MA (red line) @ 0.7393.
As for upside levels:
There is the trendline resistance which sits near 0.7450 currently as the first level to look at followed by the 25 July high @ 0.7464 and then the 9 July high @ 0.7484. Offers are lined up at 0.7500 with the 100-day MA (red line) @ 0.7529 the next key level thereafter.
In the bigger picture though:
Downside moves appear to be capped by the May 2017 low @ 0.7329 while a period of consolidation is now being observed over the past month. The obvious pattern is that we're seeing a succession of lower highs and higher lows, indicating a possible wedge and the more this persists then the closer we are to a break out in price eventually.
