AUD/USD: Bearish Bias Intact Despite Positive Chinese PMI
Capital Trust Markets | Oct 01, 2014 04:23AM ET
Technical Bias: Bearish
Key Takeaways
· Australian dollar traded lower during Asian session after the retail sales report failed to impress the Aussie dollar buyers.
· Chinese Manufacturing Purchasing Managers Index came better than expected, but it overall fell from 51.7 in July to 51.1 in August 2014.
· AUD/USD looks like eyeing a test of 0.8500 in the near term.
The market sentiment favored the Australian dollar sellers recently, and it looks like that it might continue for some time until sentiment changes.
Technical Analysis
There is a trend line connecting all major swing lows on the weekly timeframe for the AUD/USD pair. It looks like the pair is heading towards the same, and eyeing test of a major support area before a reversal. The most important thing to note is that the highlighted trend line is coinciding with the 1.236 extension of the last leg from the 0.8657 low to 0.9587 high. Currently, the pair is testing the previous low, so there is a chance that the pair might bounce from the current levels. However, it might fail to gain traction and trade lower again. The 0.8500 looks like a major support in the long term, and the Australian dollar buyers might fight to protect the downside around the mentioned support area.
Alternatively, if the AUD/USD pair bounces from the current levels and closes above the 0.8800 level, then it would increase the chances of a double bottom. In that situation, there is a chance of it trading above the 0.9000 level in the medium term.
Chinese NBS Manufacturing PMI
Earlier during the Asian session, the Chinese Manufacturing Purchasing Managers Index (PMI) was released by the China Federation of Logistics and Purchasing (CFLP). The outcome was better than expected, but there was a net decline from the last time. The AUD/USD pair was seen trading lower after the release, as it brought no relief for buyers.
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