One of the things that makes trading the Aussie a bit different is that it is a proxy for China. With that in mind, we are looking at an interesting week a head for the Aussie dollar as there is a slew of information to digest.
The Chinese GDP figures coming out on Monday will kick off the week and could lead the way for the AUD/USD pair. On Tuesday, the RBA will release its latest meeting minutes. This could also play a big part in what is about to happen. Finally, Thursday features the employment figures for Australia, and that always causes a bit of noise. Beyond all of that, the U.S./China situation is always at the forefront.
With all of that data coming out, it is interesting to see where we are on the charts. On the AUD/USD weekly chart, you will notice that last week formed a massive hammer, and we are in an area that has been important historically. In fact, there is a bit of an argument for a “double bottom” going back to late 2015. So far, there is nothing on this chart that says it can’t be. As I am a big fan of history, I suspect that the area marked – between 0.70 and 0.68 – will hold the gain. I think this is especially true with the Federal Reserve now likely to cut rates in July.
Intersection?
Quite frankly, we are at an intersection of sorts. If we break above the downtrend line on the chart, this market could rally significantly. If we don’t, then it is likely that we are still building up the momentum needed to do it. However, a break below the 0.68 level would be a disaster for the AUD. Currently, I look at short-term pullbacks as buying opportunities, as the last month has seen a change in attitude by the Fed, and the Chinese data seems to be stabilizing overall. A close above 0.71 becomes a very interesting long-term buy.
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