Employment data to be released in the new trading day
The AUDUSD was stuck in a 47 pip range for 5+ days (between 0.7519 and 0.7566). That is a very narrow trading range. Narrow trading ranges don't last forever. They tend to figure it out and make a break one way or the other. The catalyst can be data (China data was not bad) but the "story" is often told via the technical levels as well. The AUDUSD stepped higher, through technical levels one step at a time in trading today.
- Today, the pair based at its 200 day MA (solid green line in the chart above at 0.75307),
- It moved above its 100 hour MA at the 0.75437 currently (it was lower at the time). The move above showed some upside momentum. Buyers were showing more interest.
- The next step was to get above the 100 day MA at 0.75556. That worked and the market used the MA as another risk defining base. The price moved higher.
- Finally the 5 day ceiling high was broken at 0.7566 and the pair took off.
A consolidation into the NY opening, was broken when the US data came out weaker. The price moved from 0.7575 to the high for the day at 0.7635.
The longs from below (and on each successive break), were rewarded along the way. The market, "figured it out".
What now?
Looking at the daily chart, the rise today has moved above a swing area from 0.7605-10 (see red circles in the chart below). That is yet another step in the bullish direction. It also is close risk for the pair now. Stay above is more bullish. Other support will be eyed at the 0.7588 level (61.8% retracement).
The "horse left the barn" early in the trading day, and accelerated on the break outside the 47 pip trading range.
Can the pair continue to trend higher from here?
Sure anything can happen, but there is more risk events with the FOMC decision and press conference looming. The pair has also moved 103 pips. The 22 day average is 55 pips so we are extended. That could slow the trend.
Technically though, we trade in the upper range of the pair (between 0.7605 and 0.7750) and can go and retest that key ceiling area (between 0.77307 and 0.7755). The buyers definitely took more control today. It is up to the sellers to take back control. Where does that happen?
Stay above 0.7605-10 and buyers remain in control. It will take a move below that level (give it to 0.7600 now) to turn some (a small amount) of the control back to the sellers. Until then, they have not taken control.
PS. In addition to the FOMC risk event, the Australia employment report will be released at 9:30 PM ET/0130 GMT. The expectation is for the employment change is expected to show a 10K increase (vs 37.4K last month). The unemployment rate is expected to remain unchanged at 5.7%. Last month full time employment fell -11.6K and part time employment rose 49.0K.