AUDUSD is leading gains among the major currency pairs in today’s trading after PMI reports from Australia point towards growth. As of this writing, the currency pair is up by 0.19% as it trades around 0.7111.
According to Markit, the country’s manufacturing PMI report for July is at 53.4 which is higher than the reading for June at 51.2. Meanwhile, the services PMI clocked in at 58.5 for the month from 53.1 last month. These numbers are positive for the Australian dollar because they hint at industry expansion. Readings above the 50.0 baseline is interpreted to mean growth.
On the 1-hour time frame, it can be seen that AUDUSD has managed to hold on to support at the 38.2% Fib level (when you draw the Fibonacci retracement tool from the low of July 20 to the high of July 22). It would seem that the market has already bounced off support at the 38.2% Fib level twice which could mean that a double bottom chart pattern could be in the making. When you enroll in our free forex trading course, you will learn that this chart pattern is considered a bullish reversal indicator. Near-term resistance for the currency pair is at 0.7135 where the neckline of the double bottom would be. A strong close above this price could mean that AUDUSD may soon trade higher to 0.7170 where it peaked on July 22.
AUDUSD, 1-Hour Chart
On the other hand, a strong bearish close below today’s low at 0.7091 could mean that there are still sellers left in the market. It could mean that AUDUSD could still trade lower. On the 4-hour time frame, it can be seen that the currency pair still has to trade lower and still maintain its uptrend. By connecting the lows of July 14 and July 20, it can be seen that there is trend line support around 0.7070.