AUDUSD Is Holding on the Lower Trendline of an Ascending Wedge Pattern
Jason Lubin August 21, 2020 11:40 PM
The U.S. Dollar Currency Index rises as U.S. economic data beats estimates.
The US Dollar was bullish against most of its major pairs on Friday with the exception of the NZD and CAD. On the U.S. economic data front, Markit's U.S. Manufacturing Purchasing Mangers' Index spiked to 53.6 on month in the August preliminary reading (52.0 expected), from 50.9 in the July final reading. Markit's U.S. Services Purchasing Mangers' Index jumped to 54.8 on month in the August preliminary reading (51.0 expected), from 50.0 in the July final reading. Finally, Existing Home Sales surged to 5.86M on month in July (5.41M expected), from a revised 4.70M in June.
On Monday, no major economic data is expected to be released.
The Euro was bearish against most of its major pairs with the exception of the GBP. In Europe, U.K. Office for National Statistics has reported July retail sales at +3.6% (vs +2.0% on month expected). Research firm Markit has published preliminary readings of August Manufacturing PMI for the Eurozone at 51.7 (vs 52.9 expected), for Germany at 53.0 (vs 52.5 expected), for France at 49.0 (vs 53.7 expected) and for the U.K. at 55.3 (vs 53.8 expected). Also, preliminary readings of August Services PMI were released for the Eurozone at 50.1 (vs 54.5 expected), for Germany at 50.8 (vs 55.1 expected), for France at 51.9 (vs 56.3 expected) and for the U.K. at 60.1 (vs 57.0 expected).
The Australian dollar was bearish against most of its major pairs with the exception of the GBP and EUR.
The AUD/USD declined 32 pips on Friday. The currency pair has been advancing within an ascending wedge pattern that began to form after the pair crossed above its 200-day moving average. The RSI is just above 50 and pointing down. The pair is likely to find support on the lower trendline and bounce towards its 2020 high of 0.7275. If price can break above the 0.7275 resistance, it could potentially reach for 0.7395, a level last reached in December of 2018. If the pair falls below the lower trendline then traders should look to the 0.7065 support level for a possible rebound. If price cannot hold at 0.7065 it would be a bearish signal that sends the pair back to 0.6970.
Source: GAIN Capital, TradingView
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.