The AUDUSD is trading at new session highs and in the process is looking to test its falling 100 hour moving average at 0.70763 (see blue line in the chart above).
The price moved above the 100 hour moving average briefly on a number of hourly bars on Wednesday of last week, but could not sustain momentum. The failures above that moving average line (the price cannot reached the higher 200 hour moving average - green line), ultimately led to a rush to the downside on Wednesday, Thursday and Friday which saw the pair bottom near 0.69672.
That fall last week took the price below the 2021 low from December at 0.69921 (see daily chart below), and had the pair trading at the lowest level July 2020 (see daily chart). The price also moved below the 38.2% retracement of the move up from the 2020 low at 0.70477, and below a swing area between 0.6992 and 0.70627. The prices currently above all those levels trading at 0.7072.
The pair is failing on the break of the cluster of technical levels on the daily chart. As a result, traders will be watching each level (0.7062, 0.70477 and 0.6992) for bias clues going forward. If the price can continue to stay above, the buyers can keep the correction move to the upside going. Move below and sellers take back more short-term intraday control.
Having said that, so far the 100 hour moving average is also finding risk defining sellers. If risk can be defined and limited, traders will lean against those levels with stops on moves above. The high price today just reached 0.7076 right at the falling moving average level.
The battle is on. Buyers off the failure on the daily chart have some ammunition, while sellers against the 100 hour moving average are also staking their claim to the bias.
The Reserve Bank of Australia will announce their rate decision in the new trading day (10:30 PM ET). The market is fully expecting the central bank will end its bond buying campaign. They are also expecting that Lowe and Co. could hike rates as soon as May given rising inflation and low unemployment.
Like many of the central banks the nuances of the statements will be analyzed closely and any surprises will certainly be acted upon by market participants. The move back higher today, takes some of the bearish bias out of the pair going into the meeting.
If the RBA are more hawkish a move above the 38.2% retracement at 0.7099 would have traders looking toward the falling 200 hour moving average at 0.71329.
The more dovish central bank would have traders looking back toward 0.70226 followed by the low from 2021 at 0.69921 and the low from Friday at 0.69672.
