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AUD gaps lower after weak data
Alex Joyner from Faraday Research talks through his expectations for the Aussie: “The Australian Dollar has been moving within a consolidation zone since mid September. This followed a period of weakness, during which the Aussie dropped by over 500 points in a fortnight. Since then we have been watching the pair closely for good opportunities to place short trades, given the market’s bearish bias. We can see on the daily chart that during the second half of last week a bearish candle pattern formed at the roof of the consolidation zone and the price action rotated lower. Moving into this week, the price opened up with a significant gap lower. Then, early this morning, this was followed by a heavy sell off after an shock 11% decline in building approvals. On top of this we had poor data out of China with factory activity falling to a five month low.
Zooming into the hourly candle chart you will see that the price has actually gapped below a key zone of support and the retraced to retest it. Today we will be looking out for price action signals that bearish momentum has resumed in order to enter a short position. If this does happen, we would look to place our stop above the key zone and set an initial target of 0.8650.”
01:13 minutes
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