AUDUSD broke past a resistance area on its 1-hour time frame and rallied to a high of .8250 before retreating for a pullback forex setup. Price is now retracing to the 50% Fibonacci level, which lines up with the broken resistance level at the .8150 minor psychological support.
Stochastic is moving up, indicating a buildup in buying pressure which might push price back up to the previous highs. Stronger bullish momentum could lead to a break past .8250 and a move towards the .8300 levels and beyond.
Forex Setup Levels
Earlier today, China reported its trade balance, which came in line with expectations and provided support for the Australian dollar. There are no other event risks for this forex setup from Australia today while the US has only a few medium-tier reports on tap.
Last Friday, NFP data from the US came in stronger than expected but revealed weak spots in the participation rate and wage growth. This suggests that the Fed might hold off any tightening moves until these components show consistent improvements.
Going long at .8150 with a stop below the 61.8% Fib or the .8100 handle and a target of .8250 could yield a good return on risk for a day trade. Aiming higher while trailing the stop could maximize profits while reducing risk for this forex setup at the same time.
However, a break below the Fibs might be possible and indicative of more losses for AUDUSD. A move below the 61.8% Fibonacci retracement level could take AUDUSD down to the previous lows around the .8050 minor psychological level.
Tomorrow’s US retail sales releases might act as bigger catalyst for this pair’s price movement, with weak data likely to spur a rally and strong figures possibly leading to a move lower for AUDUSD and invalidating the retracement forex setup. The headline figure is expected to show a 0.2% gain while the core figure could indicate a 0.1% uptick.
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