The Australian Dollar has erased its last 2 week´s gains against the US Dollar, nevertheless we remain bullish. In the last meeting of the Reserve Bank of Australia (RBA) on July 5th the decision was made to leave its monetary policy unchanged. This is not news but its part of our macro analysis. Here are some quotes from Governor Glenn Stevens' statement:
- "The Board decided to leave the cash rate unchanged at 1.75 per cent" (from its cut in may 3rd 2016)
- "In Australia, recent data suggest overall growth is continuing"
- "Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend"
The AUD/USD has now hit an important technical level that we were waiting for to get a bullish signal to buy Australian Dollar. The up move started on May 26 and this is the 4th test to its tren line. Personally I don´t like to trade trend line bounces unlessa clear reversal signal of the corrective move; in this case a bullish break.
Even though we got a bounce from the 76.4% and a bullish engulfing candle off the trendline I´m not convinced of the reversal just yet. Right now we are trading around the 0.7495 level on massive volume, we have broken with the immediate down trend line but for this move to be confirmed we need a break above the 0.7514 level, previous zone of big volume/POC and previous double top.
Breaking with this level will give the AUD/USD wings to hit the next high volume level for an 80 pip rally. Waiting game is on.
