The AUD/USD pair rose during the Friday session, as risk appetite increased during the Friday session. The pair has been struggling lately, but this previous week’s bearishness has been all recovered due to the Friday move. Just above here, we do see shooting stars on both the daily and weekly charts, and this does suggest that we are tight enough in a smaller range.
On a break above the 1.0350 level, we would become very bullish of the Australian dollar suddenly as it would smash through not only to shooting stars on the daily chart, but the aforementioned weekly shooting star. This would be a serious change in momentum for the bullish trader. Until this happens, it’s hard to see anything to get overly excited about in this market as it is so sensitive to headline risks, and we have to be cognizant of the fact that there are many out there.
The 1.03 level is the 50% Fibonacci retrace of the downtrend that started months ago, so of course it did attract a lot of attention by the sellers. We think that the headline risks out there are probably skewed to the downside still, so we are a little bit hesitant to get too overly bullish of the Australian dollar at the moment.
Whether or not the Chinese can continue growing there economy at a robust pace is truly was going to move the Australian dollar before it’s all said and done. It is because of this that the Chinese economic announcements are very vital to the health of this currency. With the Australian sending most of their exports to China, this is an excellent way to play the Chinese situation by proxy.
The candle on Friday although bullish, is an inside candle nonetheless. This suggests that the range is going to tighten up further, and an explosive move could, and the relative near term. This would more than likely be based upon headlines coming across the wires, and as such this does skew our opinion to the downside. Obviously, the parity level should produce some type of support so we would expect to bounce from that level.
Written by FX Empire