AUD/USD – Trading the Australian Employment Data

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AUD/USD - Trading the Australian Employment Data

The AUD/USD is consolidating this week, and there is key jobs data coming up in the 12/11 Asian session. Let’s first take a look at the technical development then look at the scenarios surrounding the Australian employment change data.

AUD/USD 4H Chart 12/10
audusd 4h chart 12/10
(click to enlarge).

The AUD/USD did start the week with another push to a new low on the year near 0.8225. After that, it rallied back to about 0.8370, still maintaining the bearish bias and momentum seen in the 4H chart.

We can say there in the near-term, AUD/USD could be seen as neutral-bearish, with emphasis on the bearish component. The neutral component is described by this week’s range between 0.8225 and 0.8370.

Now, let’s examine the pending Australia jobs data.

AUS Employment Change (November)
Forecast: 15.2K
Previous: 24.1K
aus employment change nov 2014
(click to enlarge; source: forexfactory.com)

As you can see, employment change data has not be persistent. If we can string together 3 months of positive gains, the AUD might start gaining traction again, especially if good jobs data is accompanied by other economic data, which is usually the case.

Now, let’s consider a few premises before assessing post-data scenarios. 
1) AUD/USD is in a persistent downtrend as shown in the 4H chart.
2) Good jobs data should not be able to turn things around for the AUD/USD, not yet. So if we get a bullish reaction, we should look for sellers on the rally.
3) Data in-line with expectations gives AUD/USD over to the USD-story. If the USD strengthens, then AUD/USD is likely bearish. This week so far, the USD has been paring its strength, but in the second half, it has a chance to spring back, so the bias for AUD/USD is bearish based on the USD-story.
4) Worse-than-expected data should push AUD/USD lower, into new lows on the year.

1) Bullish reaction: In the scenario that price pushes above 0.8375, there is upside risk towards the next resistance factor, which could be the falling trendline coming down from 0.88. Thus, if there is a bullish reaction, watch out for sellers on the rally that approaches the falling trendline in the 4H chart (probably around 0.8450), especially if the RSI also stalls around 60.

2) If price is initially bullish heading into the release, but holds below 0.84, and falls back below 0.8350, we are likely in a bearish continuation mode, with the 0.8225 level in sight and with risk of falling lower.

3) If price is initially bearish heading into the release, a poor release should help it push below the 0.8225 low to test the 0.82 handle.

4) Now, if AUD/USD is initially bearish but get a bullish reaction after the data, it depends on whether the data is good or bad. If it is good and we get a reaction, be ready to fade it at 0.83. BUT if the data is BAD, and AUD/USD still rallies, then either AUD is resilient or the USD is weak, or both. Either way, we would probably want to fade it from a higher level then 0.83 (maybe around 0.8350-0.8370), if AUD/USD rises despite poor data.

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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.