Technical Bias: Bearish
Key Takeaways:
- AUDUSD rallies as bullish pin bar emerges
- Australia’s services sector grew more than forecast
- Bullish momentum likely to continue in near future
The Australian Dollar (AUD) rallied broadly against the US Dollar (USD) on Wednesday, increasing the price of AUDUSD to more than 0.7800 following the Services Index news. The technical bias however remains bearish in long term due to Lower Lows on the daily chart.
Technical Analysis
As of this writing, the pair is being traded near 0.7815. A support can be seen near 0.7625, the swing low of the bullish pin bar ahead of 0.7600, the psychological number. The bias will however remain bearish as long as the 0.8293 resistance area is intact.
On the upside, the pair is expected to face a hurdle near 0.7881, the 38.2% fib level ahead of 0.7960, the 50% fib level and then 0.8297, the swing high of the last major rally as demonstrated in the above daily chart.
AIG Services Index
The services sector in Australia grew by 49.9 points in January as compared to 47.5 points in the month before, up beating the average forecast of 46.11 points, a report revealed on Wednesday. Generally speaking, higher services index reading is considered positive for the economy thus a better than expected actual outcome spurred bullish momentum in the price of AUDUSD which is likely to continue in the near future.
Trade Idea
Considering the overall technical and fundamental outlook, buying the pair around the current levels appears to be a good strategy in short to medium term. A tight stop should however be placed at swing low of the bullish pin bar as described above.
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