AUD/USD risks forming Head & Shoulders on weak China retail sales release
|- China Q4 GDP & industrial production beat estimates but
- Forward-looking retail sales missed estimates.
- AUD/USD could complete H&S in 1-hour chart.
China fourth-quarter GDP came in at 6.8% y/y, beating the estimate of 6.7%. Also, December industrial production bettered estimate of 6.02% y/y to print at 6.2%.
However, the Aussie is unimpressed, seemingly due to a big miss on the forward-looking retail sales number. Consumption, as represented by retail sales, rose 9.4% y/y, missing the estimate of 10.1% by a big margin.
Moreover, a weak retail sales data (dismal consumption) and an upbeat industrial production number indicate the economic rebalancing (from investment-driven growth to consumption-driven growth) is happening at a snail's speed.
The upbeat Aussie labor data released earlier today also failed to put a strong bid under the Aussie dollar. As of writing, the AUD/USD pair is trading at 1-hour 50-MA level of 0.7966. The 1-hour chart shows, the pair risks falling to 0.7942 - head and shoulders neckline on 1-hour.
AUD/USD Technical Levels
A 1-hour close below 0.7942 would confirm the head and shoulders breakdown and open doors for 0.79 (10-day MA) and 0.7875 (Jan. 5 high). On the higher side, a break above 0.7978 (76.4% Fib R of Sep-Dec drop) could yield a rally to 0.80 (psychological level) and 0.8037 (Sep. 21 high).
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