Aussie has been performing very well over the past year, driven by higher than expected economic news and strong growth compared to the rest of the world. However, since November 2009, price has been ranging. We’ll discuss and seek to predict the outcome of what’s going to happen in the following week.
Possible scenarios
AUDUSD continuation or reversal?
From the Day chart, there are 3 possible scenarios.
- Light blue – Bullish flag pattern. Hinting a strong trend continuation
- Orange – Triple top. Hinting a reversal pattern
- Price continue to trade within the zone i.e. between the Red and Blue horizontal lines
Week 17 (26th APR – 30th APR)
AUDUSD rejected by channel; to find support
In this week, the Aussie fell at the start of the week hitting the bottom of the Green Channel before turning up again. At this point of time price had formed a lower low which meant that there could be a downward trend in place. However, there was a turn of events when price surged upwards due to growth in producers’ price on goods and consumer spending. The Aussie broke through the Green Channel and reached a high close to the previous week high and did not manage to reach or most importantly go above it and at the same time there is a strong horizontal line that was drawn on the Day chart. We can also see that price went back in to the Green Channel, signalling a false break out from the Green Channel.
Week 18 (3rd MAY – 7th MAY)
What can we expect in the coming week? We should be able to expect the Aussie to continue to fall until the bottom of the channel as it acts as a good indication of support. We should also be expecting a major reversal if only price closes below both the Black Trend line and the Green Channel.
However, one should be cautious to not just rely on the break of the Black Trend line as there were many false breaks before.
Moreover, fundamental factors should be taken into consideration since in the coming week there would be significant number of critical economic news releases. For instance, Australia’s cash rate would be released by the RBA on 4th May (Tuesday) and expected forecast is an increase of 25 basis points which could push the Aussie upwards if it is fulfilled.
