AUDUSD is unchanged at its opening price today at 0.6432 despite Australia’s retail sales report for March coming in better than expected. Its technical setup even suggests that the currency pair could soon trade lower.
According to the Australian Bureau of Statistics, consumer spending rose by 8.5% last month. This figure was higher than the forecast and February’s reading which were both at 8.2%. A closer look at the report revealed that the uptick in retail sales was driven by increased spending ahead of the lockdown. Consequently, market investors paid little attention to the positive report as it implies that it could be an outlier; it does not necessarily reflect the health of the Australian economy.
On the 1-hour time frame, it can be seen that AUDUSD pulled back some of its losses to the 50% Fib level (when drawing the Fibonacci retracement tool from the high of April 30 to the low of May 4). In fact, a closer look at the currency pair’s recent price action reveals what looks like a double top chart pattern.
Characterized by a market getting rejected at a price level twice, a double top is considered as a bearish indicator. A close below yesterday’s low at 0.6416 would effectively break the neckline support. AUDUSD could then trade lower to near-term support at 0.6371 where the currency pair bottomed on May 4.
On the other hand, a strong close above yesterday’s high at 0.6475 would invalidate the chart pattern. Instead, it could signal that there are still buyers left in the market who could possibly push AUDUSD to its April 30 highs at 0.6570.