AUDUSD is carrying on with its uptrend, as the pair is still moving above the rising forex trend line on its 4-hour chart. The pair recently reached highs around the .8100 mark before showing signs of a correction.
Price is moving close to the ascending trend line and the longer-term exponential moving average, which has also held as dynamic support in the past. In addition, a shallow bullish divergence can be seen, with price forming higher lows and stochastic drawing lower lows.
Forex Trend Play
If the forex trend line holds as support, AUDUSD could make its way back to the previous highs or even create new ones closer to the .8200 handle. On the other hand, a break below the rising support level could indicate that a reversal is bound to take place.
The main event risk for this trade setup early in the week is the release of the RBA meeting minutes, which should shed light on why the central bank cut interest rates in their latest statement and if they’re likely to do so again. Dovish remarks could lead to a selloff for AUDUSD and a potential move to the next area of interest around .7800.
For now, the short-term EMA is treading above the long-term EMA, suggesting that the uptrend is about to carry on and that a bounce off the forex trend support might be seen. Data from the US economy could continue to support the climb, as recent reports have been falling short of expectations.
Last Friday, the US printed a dismal industrial production and capacity utilization report, followed by a bleak Empire State manufacturing index and a sharp decline in preliminary consumer sentiment. These suggest that the US economic recovery is slowing down and that the Fed might be inclined to keep rates on hold for the rest of the year.
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