By Christopher Lewis Christopher L.
Potential signal:
- I am buying on a move above 0.7040 with a stop at 0.6950.
- I will be looking to hold until 0.7110.
The Australian dollar gapped higher to kick off the trading session here on Monday, but it seems to be struggling with the 200-day EMA. This is an area that has caused some problems over the last several days, so the question now becomes: Is this a double bottom in a larger consolidation area? This will be a matter of trying to determine whether or not we are going to see a strong move in or out of the same trading pattern over the last few weeks.
You could make that argument, but we would more likely than not have to break above 0.7040 for that to be a thing. A turnaround from here and an attempt to fill the gap could be the way short-term traders play this, based on range-bound trading—maybe something like on the one-hour chart. Adding the stochastic could give you a little bit of a heads-up.
We’ve already crossed into the overbought position and started to roll over
We’ll see. We have already crossed in the overbought position and started to roll over, but you will have to be nimble to be trading along those lines.
Ultimately, this does look like a basing pattern, but it is worth noting that the Reserve Bank of Australia has a problem now, with the latest jobs report being so poor. A loss of 39,600 jobs was reported last week for the previous month, as opposed to the expected addition of just about 20,000. It was a huge swing in the wrong direction.
So, we’ll see. Are the Aussies starting to become a little bit more dovish? The 0.6850 level continues to be the floor, while 0.7250 continues to be the ceiling. Right now, if we can break above that 0.7040 level, then I’m convinced. Otherwise, we probably just continue to consolidate.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
