AUDUSD has been trending higher on the 1-hour chart, moving inside an ascending channel pattern. Price got rejected on its test of resistance at the .7750 mark and could be headed back towards support.
Using the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the channel support around .7650 and a former resistance area. In addition, the bottom of the channel also lines up with the 100 SMA, which typically holds as dynamic support.
In addition, the 100 SMA is above the 200 SMA so the path of least resistance is to the upside, which basically means that the uptrend is more likely to carry on than reverse. The gap between the moving averages has been maintained, reflecting steady bullish pressure.
Meanwhile, RSI is heading south, which means that sellers may still be in control of price action for now, taking AUDUSD all the way down to the bottom of the channel. Stochastic is already in the oversold region but hasn’t turned higher to indicate a return in buying momentum. Once it does, price could set its sights back on the channel resistance or the .7800 handle.
Economic data from the US has been mostly stronger than expected so far this week but traders appear to be hoping for more significant improvements before pricing in expectations of another Fed rate hike before the end of the year. US initial jobless claims and import prices data are lined up today.
Later on in the week, the US will print its retail sales figures, with analysts counting on a 0.4% increase in the headline figure and a 0.2% uptick for the core figure. This would be weaker compared to the previous month’s gains so lower than expected results could reinforce dollar weakness. As for Australia, the MI inflation expectations index fell from 3.7% to 3.5%.