AUD/USD Forex Signal: Rising Wedge Points to Pullback – DailyForex.com
With the wedge nearing its confluence zone, there is a likelihood that the pair will break out lower.
The AUD/USD price held steady as investors priced in a strong economic rebound for the Australian economy. The pair rose to a high of 0.7385, which was about 2.65% above the lowest level in September.
Australia Economic Recovery
The Australian economy is expected to rebound in the coming months as the country reopens. According to the International Monetary Fund (IMF), the country’s economy will expand by about 5.9% this year and then stage a bigger rebound in the coming year. This growth will be driven by the services industry, which has remained under pressure this year because of the weak tourism industry. The recent lockdowns have also affected the country’s recovery.
Recent Australian data also point to a strong rebound of the economy. For example, on Tuesday, data by NAB showed that business confidence jumped to 13 in September from the previous -6. This is a sign that more businesses are optimistic about the state of the economy. At the same time, flash numbers show that retail sales in the Sydney is rising after travel restrictions were lifted on Monday.
The AUD/USD also rose after the relatively weak economic data from the United States. Numbers by the Bureau of Labor Statistics showed that the country’s job openings declined to 10.43 million in August after rising to a multi-year high of 11.09 million in the previous month. The vacancies were relatively lower than the median estimate of 10.95 million.
There are two major catalysts for the AUD/USD in the near term. The biggest mover will be the US Consumer Price Index (CPI) that will come out later today. Analysts expect the data to show that prices remained stubbornly above the Fed’s target of 2.0%. With energy prices rising, this trend will likely continue for a while. The next key mover will be the latest Australian jobs numbers scheduled for Thursday.
The four-hour chart shows that the AUD/USD pair rose sharply in the past few days. It has risen above the 25-period and 50-period exponential moving averages (EMA). At the same time, it has formed a rising wedge pattern that is shown in green. This pattern is usually a bearish signal. The MACD has also been rising.
Therefore, with the wedge nearing its confluence zone, there is a likelihood that the pair will break out lower. If this happens, the next key support level to watch will be at 0.7300.
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