If you had gone on vacation this week and someone told you AUDUSD was trading at .7820 on Friday afternoon, you’d hardly be surprised; after all, the pair was closed last week right at the same .7820 level! Of course, just looking at the weekly closing prices hides all of price action throughout the week, and in the case of the AUDUSD, the outlook from the .7820 level is much less optimistic than it was at this time last week.
From a technical perspective, the entire week’s price action can be seen as a 5-candle Evening Star* formation, with control of the currency pair gradually shifting from the buyers (Monday and Tuesday’s bullish candles) to neutral (Wednesday’s Shooting Star Doji) to the sellers (Thursday and Friday’s bearish candles). These types of patterns are often seen at near-term tops in the market and point toward more weakness moving forward. This bearish outlook is bolstered by the Slow Stochastics indicator, which rolled over from overbought territory this week.
The proverbial “Queen on the Chessboard” in the coming week will be the RBA, which, similar to its last two meetings, is anticipated to cut interest rates. The central bank has confounded traders’ expectations by holding steady for two meetings now, so if it opts to hold fire once again, AUDUSD could bounce back. That said, if the RBA finally bows to doves and cuts rates, the Aussie could fall toward the Fibonacci retracements of the April rally at .7750 (61.8%) or even .7665 (78.6%) by midweek.
* An Evening Star candle formation is relatively rare candlestick formation created by a long bullish candle, followed a small-bodied candle near the top of the first candle, and completed by a long-bodied bearish candle. It represents a transition from bullish to bearish momentum and foreshadows more weakness to come.
_20150501160704.jpg "AUDUSD daily")
Recommended Content
Editors’ Picks
AUD/USD recovers further toward 0.6800 on risk-recovery
AUD/USD extends recovery toward 0.6800 in Asian trading on Thursday, despite mixed Australian employment data. The Aussie cheers a return of risk appetite, which weighs on the post-Fed US Dollar recovery. All eyes now remain on US economic data for fresh impetus.
USD.JPY reverses sharply from 144.00, as US Dollar recovery fizzles
USD/JPY is attacking 143.00 in Thursday's Asian session, reversing sharply from 144.00. The pair pares back gains in tandem with the US Dollar, as the latter's post-Fed recovery falters due to a rebound in risk sentiment. The focus is next on the US data due later today and Friday's BoJ decision.
Gold price regains positive traction amid a modest USD pullback from one-week high
Gold price attracts some dip-buying during the Asian session on Thursday and seems to have stalled its retracement slide from the $2,600 mark, or a fresh all-time peak touched the previous day. The US dollar trims a part of its intraday gains to a one-week high, which turns out to be a key factor lending support to the commodity.
Crypto leaders and Congress blast SEC over crypto regulations
In a meeting on Wednesday, several crypto leaders and congress members debunked the Securities and Exchange Commission's harsh regulatory approach toward the crypto industry.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.