Technicals | Apr 10 2024
Bottom Line 09/04/24
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 63.80 / 61.00 – 60.00
Resistance Levels: 68.26 / 70.72
[Chart tracks the The Invesco CurrencyShares Australian Dollar ETF (FXA)]
Technical Discussion
Reasons to remain neutral (turning more bullish above 68.26):
→ corrective price action has been dominating longer-term
→ basing sideways pattern has been in play for over 18 months now
→ The Australian Dollar will pick up if a ‘risk on’ global commodity-driven environment can return and sustain.
Future direction in the Aussie will in part come down to decisions on whether or not the RBA is going to be cutting rates this year and how often. And this relates to the Fed Reserve’s decisions as well.
There is a lot of noise around all this and of course, it will have a major influence on whether the Bulls are finally going to take control, or whether the Bears are going to continue to dominate. The status of the Chinese economy will also have an influence on our currency combined with precious and base metal strength. If both of these factors can turn bullish then the Australian dollar will be putting up the spinnaker.
Technically we continue to keep our eyes on this loosely defined bullish reverse head and shoulders pattern. I say loosely defined as it has formed more so as part of double bottom rather than immediately as part of a potential downtrend reversal.
Either way, we like the pattern in its present form, on the proviso that the right shoulder as highlighted on our chart does not get broken below circa 63.80. If the downside break does occur then all potential bullish bets will be off the table.
Right here and now though we like the way price action is consolidating in and around the 200-day MA preparing itself toward making a decision on which direction it is going to take next.
Our bias continues to be to the upside yet we are happy to hand it over to price action to lead the way and prove whether our bias is going to be correct or not. Bigger picture the bullish confirmation we are looking for is above 68.26. If this can be achieved then we see no reason why we cannot witness a momentum-driven move north up to around the 74.00 zone. We will know soon enough.
Trading Strategy
Our aggressive long trade recommendation at 65.06 remains active with initial stops placed at 63.79. It presently sits in some slight profits yet remains in indecisive mode consolidating in and around the 200 Day MA as stated. Ideally, we will have a clearer picture on things either way within the next week or two.
Caution: The Invesco CurrencyShares Australian Dollar ETF (FXA) does tend to gap around. So recommended for experienced traders only.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
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