The Aussie is at interesting levels being at a monthly resistance. These current technical levels is where the current down trend can either be compromised or rejected.
On the monthly chart a typical continuation pennant has formed. Volume has expanded into the initial move of the pattern and contracted on the formation. The next signal is to watch for a break of the pennant with a spike in volume. see chart.
The daily chart has rejected off resistance numerous times and is now subject to fail to make new highs. Typically If failure persist too many times we will be looking at a sell off before another attempt.
Fundamentally this weeks data that will effect the aussie.
Building approvals. (October 4th)
Domestic housing has been trending down since 2015 , and Tuesdays data is forecast to continue this trend . With the housing market cooling it does leave more scope to cut rates. The Reserve Bank of Australia (RBA) has concern with lowering rates with a heated housing market. This can be an indication that more cutes are likely.
Cash rate (October 4th)
Just a couple of hours later the cash rate and RBA statement will be released. This as always causes some volatility in the market. The cash rate is forecast to remain at 1.5% . I also agree with this. I cant see the RBA lowering the cash rate again but sources suggest there will be another one this year. Like at lot of central banks have been waiting for a Fed hike that has yet to happen, and leaves banks like the RBA and RBNZ to continue on with their cutting phase.
Today I expect the Aussie to head back down to the .76000 levels which is a healthy support zone.
Trade safe 🙂