Published On: Thu, Mar 16th, 2017

Anticipating an AUDUSD bull run



Today’s Australian employment data came in on the soft side but failed to put much of a dent on AUDUSD. The cross slipped from 0.7715 to 0.7690 momentarily on the back of a surprise increase in the unemployment rate to 5.9% (5.7% expected). 

However, the Aussie still has a head of steam up following the US dollar’s selloff post the FOMC monetary policy statement and, more significantly, the updated dot plot. It seems the Fed is in no hurry to move from the New Normal to the Old Usual. In fact the Old Usual itself won’t be what it used to be: the Fed held its projection for the policy rate in 2019 at 3% and indicated it will take its time getting there. Markets had been expecting a signal they would move with a bit more urgency.

Also holding AUDUSD back today was a weak GDP report out of New Zealand. While it’s a bit like the tail wagging the dog, the similarities in the economic situation in both countries means Aussie traders keep an eye on events across the Tasman sea.

Management and risk description

From both Elliott Wave and classical charting perspectives, AUDUSD has considerable upside potential ahead (refer daily and weekly charts below).

With support now about 0.7680, 0.7650, 0.7635 max. looking for rally onto

0.7780 and then 0.7835 (en route to 0.8000+).

From an Elliott Wave perspective I am interpreting the start of medium-term wave-C targeting the 0.8500 level. From a classical charting standpoint, a sustained break above 0.7740 will yield a Triangle objective of 0.8420 as well as a 6-month Inverse Head and Shoulders target of 0.8340 (refer daily chart).


Entry: AUDUSD is seen as a buy at market.

Stop: Just under 0.7620, initially.

Target: 50% at 0.7938 and 50% at 0.8316.  

Time horizon: Allow several weeks at least for both targets to be met.

AUDUSD daily chart (click to expand)

Source: ThomsonReuters  

AUDUSD weekly chart (click to expand)

Source: ThomsonReuters.  Create your own charts with SaxoTrader; click here to learn more

— Edited by Susan McDonald
Non-independent investment research disclaimer applies. Read more

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