AUDUSD (3 to 6 Months), Short followed by LongThis is based on the observation of the downward AUDUSD channel established from the beginning of this year.
Apart from the technically lined lower lows and lower highs along well defined trendlines,
a fundamental observation can be linked with the fact that we have observed cycles of:
- Bullish Signs: Lower Unemployment rates, high GDP growth approaching 3% and especially an increasing trade surplus (3 Billion $ a month now, mostly due to booming LNG Exports).
- Bearish Signs: Very dovish RBA keeping interest rates as low as they get and a kind of busting housing market in the east coast.
For the following days expect the AUDUSD to trade momentarily higher from this level at (0.724 maybe up to 0.73 max), and pop out of the descending trendlines, but the first break will likely be a false one (or call it SL hunt)
With the next RBA announcement mid next week, expect same cycle to repeat itself, dovish comments and AUDUSD will head down again to test key supports (TP1 0.695 or inversely USDAUD 1.44 key level)
However, Australian resources industry is in full steam now, mining sector has recovered and major LNG projects are about to start producing (Gorgon, Wheatstone, Ichthys, Queenslands' Coal Seam LNG....), Australia will overtake Qatar as first LNG exporter globally and this will likely be reflected the AUDUSD rate.
This will render RBA's dovish hammers non-meaningful and RBA will have little power remaining to curve AUDUSD down.
One other key factor to consider, is that the major four banks are challenging the RBA (NAB, Commentwealth, Westpac, ANZ) with each going their own way and increasing mortgage rates, this may put pressure on RBA to follow free market science, and with the slightest mentioning of increasing interest rates sometime in the future the AUDUSD.
A strong break of the downward channel is expected, the TP2 is estimated technically with previous trend lines , fiobonacci expansion and previous resistance level, in the range of 0.89 to 0.95.
This is a personal interpretation for the trading community, trade at your own risk.
