After yesterday’s tremendous Employment Data, price broke above the 1.035 resistance and pushed above the previous swing high back in Feb. If bulls think that their job is done and bullish initiative is on their side, they may be sorely mistaken as price only managed to push up in-so-far into the descending Kumo, with daily chart showing a Doji – highlighting uncertainty of further bullish momentum.
Stochastic on the daily chart is also peaking with Stoch line closing in on the Signal line – sign of slowing momentum. As today is the final trading session of the week, if bears manage to close the week below 1.035 and preferably below the Kumo, we could potentially see strong bearish acceleration towards the descending trendline as the breakout above 1.035 will be invalidated. Similarly, a close above current Kumo will help to accelerate bullish momentum next week for a retest towards 1.055-1.06 swing tops.
Hourly Chart shows ample support with the Kijuu-Sen providing support above Kumo. Stochastic reading is also heading towards Oversold region, with current readings close to the previous consolidation/minor dip between 13th – 14th Mar. This enhances the likelihood of Kumo support and 1.035 holding, and puts bulls in good position to break the Kumo mentioned in the Daily Chart.
Fundamenntally, market is expecting a lower chance of RBA slashing rate in the next meeting especially after strong GDP and Labor figures. As such, we could see bulls more willing to hold AUD/USD for the longer term as the risk of depreciation is lower. Similarly, there have been reports that global central banks and Sovereign funds are buying up AUD denominated bonds and products, which will continue to keep AUD/USD propped up in the long term. Strong bullish sentiment from US due to the rising stock prices can’t hurt AUD/USD either, which has a positive Beta.
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