It’s Time To Engage The AUD/USD
Dave Green • 2 min read
The AUD/USD has been putting traders to sleep for the past few sessions. But, don’t get complacent. All of that is about to change.
As everyone is aware, the U.S. FED is set to make their interest rate announcement tomorrow at 2:00 PM EST. Not to be outdone, the Reserve Bank of Australia (RBA) has a full slate of releases to make ahead of the FED:
Consumer Price Index (Quarter over Quarter)
Consumer Price Index (Year over Year)
RBA Trimmed Mean CPI
The RBA will make the statements at 9:30 PM EST this evening. Short-term volatility will spike, increasing both opportunity and risk.
The past 5 sessions have put AUD/USD traders to sleep. Since the bullish run on July 18, the AUD/USD has an average daily range of 72 pips. Compression has developed between last Thursday’s high of .7987 and Friday’s low of .7874. That is a tight range of just 113 pips.
AUD/USD Daily Chart-Compression
Is It Time To Engage?
Technicals show a bullish bias. July’s uptrend in the AUD/USD stands uncompromised.
On the daily chart, price has refused to test the 38% retracement. On the weekly chart, back to back positive candlesticks show sustained buying. Either way you slice it, the AUD is only seeing moderate pressure from the USD.
So, is it time to get involved? Absolutely. Look for the coming economic data releases to act as catalysts for volatility. The swing high at .7987 and swing low at .7874 are not likely to hold. 38% of July’s range (.7828) is an optimal location to buy.
Although analysts agree that US rates will remain unchanged, the FED is capable of surprising. Last December the FED announced 3 rate hikes are likely for 2017. If Yellen raises U.S. rates by ¼ point tomorrow, then all bets are off in the short-term.