AUDUSD is trading in the green today after China released better-than-expected economic data over the weekend. As of this writing, the currency pair is up by 0.07% at 0.6973. However, it’s worth noting that AUDUSD had rallied to a high of 0.7002 before giving up its gains. Could this be a sign of a potential reversal or is this nothing more than just a retracement?
On Sunday, it was reported that Australia’s largest trading partner enjoyed a trade surplus of 443 billion CNY. This was more than the expected reading of 283 billion CNY. Consequently, the news may have been bullish for AUDUSD because investors perceive that better economic conditions in China would also mean more trade activity with Australia. This relationship still seems to be the overall market perception despite the recent tariffs that China imposed on Australia.
It’s a holiday in Australia today which means that there are no economic reports due from the Land Down Under. It also means that AUDUSD may be a little volatile in today’s Asian trading session because of thinner liquidity.
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AUDUSD Outlook
On the daily time frame, it can be seen that AUDUSD is training around its December 31 highs. This means that if there are enough buyers in the market, the currency pair could close above Friday’s highs at 0.7012 and head to 0.7276 where it topped in January 2019.
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However, if the bullish momentum falters at $0.7000, we could soon see AUDUSD retrace some of its gains. A closer look at the 4-hour time frame shows that the currency pair has recently been consolidating in an upward slope. Consequently, a rising wedge chart pattern has formed.
When you enroll in our free forex trading course, you will learn that this is a bearish reversal indicator. And so, a bearish close below the consolidation at 0.6930 could mean that AUDUSD would soon retest the rising trendline for support (from connecting the lows of May 15, May 22, May 27, and May 29).More content
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