AUD/USD Forming a Double Bottom Attempt; NFP Ahead

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AUD/USD Forming a Double Bottom Attempt; NFP Ahead

The AUD/USD was able to edge out a new low this week below 0.8040, but it is apparently in consolidation mode as we can see in the 1H chart.

AUD/USD 1H Chart 1/9
audusd 1h chart 1/8
(click to enlarge)

The 1H chart also shows that price action essentially respected the 0.8040 area as support and is therefore forming a double bottom, with near-term upside towards the 0.8157 resistance.

NFP: The next key fundamental factor for AUD/USD will be Friday’s NFP, which is forecast to show around 241K jobs added in December. This would be a drop-off from the 321K print from November. The forecast is middle of the road, not gloomy, but not impressive. A reading of at least 250K will be needed to impress. A reading above 300K will likely help USD/JPY revive the prevailing uptrend.

Reaction/Outlook. Now, if after the NPF, price can close above 0.8160, we do have a short-term double bottom formed this week, which suggests some upside next week as well. However, because the prevailing trend is bearish, we might want to see some confirmation of this double bottom before looking for the bullish correction scenario.

Bullish Confirmation: If there is a break above 0.8160, we should look for support in the 0.8090-0.81 area. In the 1H chart ,we can see that this is the middle of this week’s range, and if price can start holding above this area, a short-term bullish outlook can be confirmed.

AUD/USD 4H Chart 1/8
audusd 4h chart 1/8
(click to enlarge)

Resistance: To the upside, the first target/resistance would be 0.8215-0.8250, which involves a previous pivot and the 200-period SMA in the 4H chart. Above that, the 0.8375-0.84 area will be the next key resistance. This area involves a previous resistance and the 50-day SMA.

Bearish Continuation: If price either fails to break above 0.8160, and/or falls back below 0.090, the pressure will return to the 0.8035-0.8040 lows, with risk of falling at least to the 0.80 handle.

Previous Post by Author: USD/JPY – Technical Levels and Conditions Ahead of the NFP Report

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.