AUD/USD Breaks Over the Ascending Triangle – Bullish Engulfing in Play! 

Posted Thursday, December 17, 2020 by
Arslan Butt • 2 min read

The AUD/USD pair closed at 0.75770, after placing a high of 0.75783, and a low of 0.75454. The AUD/USD currency pair rose for the second consecutive day on Wednesday, and extended its gains on the back of a rising risk sentiment in the US dollar market and the weakness of the greenback. The risk associated with the Aussie was supported by the rising risk sentiment in the market, after the news came in that Moderna’s new coronavirus vaccine will also be approved by the US FDA later this week, for use on the general public, in order to achieve immunity from the coronavirus. After Pfizer got approval for emergency use of their vaccine, the next company, Moderna, also raised hopes that the global economy will soon recover, raising the risk sentiment and supporting the risk-sensitive Aussie, adding to the gains in the AUD/USD pair.

Meanwhile, the US dollar was weak on Wednesday, amid the rising hopes that the US stimulus package is coming closer to reality, US lawmakers have agreed over the bipartisan proposal. The original proposal was $ 908 billion, split into two bills worth $ 748 billion and $ 160 billion. The first proposal, which includes aid for vaccine distribution and unemployment benefits, has gained traction and is expected to be passed by Congress by the end of the week. The second bill includes aid for local and state governments and temporary coronavirus liability protection, although it appears to be having more difficulty gathering the necessary support from Congress.

However, the hopes that the first bill will be released by Congress by the end of this week weighed on the US dollar and ultimately added to the gains in the AUD/USD pair on Wednesday. On the data front, at 03:00 GMT, the Flash manufacturing PMI from Australia for December came in, showing a rise to 56.0, compared to the previous 55.8, which boosted the Aussie and added to the gains in the AUD/USD pair. The Flash Services PMI from Australia also surged, reaching 57.4 in December, against November’s 55.1, which supported the Aussie and added further gains for the AUD/USD pair. At 04:30 GMT, the Australian MI Leading Index for December came in. It also rose, hitting 0.5%, compared to the previous 0.3%, supporting the Australian dollar and pushing the pair AUD/USD higher.

From the US side, at 18:30 GMT, the Core Retail Sales for November came in, showing a decline to -0.9%, against the anticipated 0.1%, which weighed on the US dollar and gave support to the rising AUD/USD. The Retail Sales for November also declined to -1.1% against the expected -0.3%, weighing on the US dollar and supporting the AUD/USD pair’s upward momentum. At 19:45 GMT, the Flash manufacturing PMI figures for December were released, indicating a rise to 56.5, against the estimated 55.9, which boosted the US dollar. The Flash Services PMI for December declined to 55.3, against the expected 55.7, which put pressure the US dollar. At 20:00 GMT, the Business Inventories for October came in, showing an increase to 0.7%, against the anticipated 0.6%, and weighing on the US dollar. The NAHB Housing Market Index also declined to 86, against the anticipated 88, weighing on the US dollar and adding strength to the rising AUD/USD pair on Wednesday.

Daily Technical Levels

Support           Resistance

0.7517             0.7584

0.7479             0.7611

0.7451             0.7650

Pivot Point:    0.7545

The AUD/USD pair is trading with a bullish bias at the 0.7633 level, having violated the resistance level of 0.7580, which was extended by the ascending triangle pattern. On the lower side, the pair may find support at the 0.7580 and 0.7545 levels. The RSI and MACD are supporting the buying trend in this pair. The idea is to buy AUD/USD over the 0.7628 level today, to target 40 pips. Good luck!

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