After 6 months of constant decline, the Aussie is ready to recover. We are reaching major monthly and weekly support here, extending back several years.
From a technical perspective, it's a good time to long the Aussie. If we check EURAUD, it appears there may be a potential double top on the weekly as well, dependent upon the strength of the Euro. Furthermore, gold (XAUUSD) is looking to rally soon, and I expect that to pull up commodity heavy currencies like the Aussie.
One thing to consider is the dollar (DXY). The dollar is currently on a bullish run, and the latest week did not provide any evidence that it would be breaking lower into a bearish wave. This leads me to believe there is further dollar strength in the future, which would serve to pull the AUDUSD pair down. It's possible that we may simple move sideways or trickle upwards along this major trendline for a while.
From a fundamental perspective, some more risk factors include the real estate market in Australia, stagnant wages, and lowered consumer spending. While unemployment is at a low around 5.4%, wages have not increased, spending has not increased, and housing prices have surprisingly decreased as well. Recently many banks, Westpac, Suncorp, Adelaide, etc. have increased mortgage rates as a result. This lack of spending, low wage growth, and rising rates could translate into bad news for the AUD. Not to mention the US-China trade war that is currently in progress. Australia has just as much to lose in the trade war as the US and China do.
Wait for confirmation of a trend in the Aussie before entering a trade. If we get firm rejections on this major support, and confirmation of a bullish wave, then we can enter long and If it breaks support, we could see AUDUSD move as low as 0.68 - 0.70. However, I think the odds are currently in favor of long positions.
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