AUD/USD Forex Signal: Bearish Patterns Emerging

Crispus Nyaga

While more gains are possible, we can’t rule out a decline in the near term.

Bearish View

  • Set a sell-stop at 0.7750 and a take-profit at 0.7700.
  • Add a stop-loss at 0.7800.
  • Timeline: 1-2 days.

Bullish View

  • Set a buy-stop at 0.7770 and a take-profit at 0.7850.
  • Add a stop-loss at 0.7740.

The AUD/USD held relatively steady as the Australian government expanded the new lockdown in Victoria for seven more days to curb the new pandemic. The pair is also rising after the relatively strong Australian GDP data and yesterday’s RBA interest rate decision.

Australian Economy

The Australian economy recorded a strong recovery helped by more consumption and robust commodity prices in the first quarter. According to the statistics agency, the economy expanded by 1.8% in the first quarter, better than the estimated 1.5%. This performance led to year-on-year growth of 1.1% and pushed the economy above its pre-pandemic levels.

According to the statistics agency, the strong performance was mostly because of a 5.3% increase in private investments. Housing investments grew by 6.4%, helped by the government’s HomeBuilder scheme. Data published yesterday revealed that house prices in Sydney jumped by more than 3.5% in April. Final consumption rose by 0.7% in the quarter.

The data came a day after the Reserve Bank of Australia (RBA) delivered its interest rate decision. In it, the bank left its pandemic response tools like interest rate and yield curve control intact. It also signaled that it will start raising interest rates in 2024. Some analysts believe that the bank will move earlier than guided.

The AUD/USD is also reacting to news that the government has extended the lockdown in Victoria by seven more days as contact tracing continues. This is important because of the important role that Victoria and Melbourne plays in the Australian economy.

The pair will also react to the Fed’s Beige Book, which is an important document that focuses on regional bank’s forecasts. It will also be affected by speeches by some FOMC members like John Evans, Raphael Bostic and Lael Brainard.

AUD/USD Technical Analysis

The hourly chart shows that the AUD/USD held steady after the latest Australian GDP data. The pair is slightly below the 78.6% Fibonacci retracement level and is above the 25-day and 15-day exponential moving averages (EMA).

The pair seems to be forming a double-top pattern whose neckline is at 0.7730. Also, the pair seems to be forming a rising wedge pattern on the hourly chart and a head and shoulders pattern on the four-hour chart. Therefore, while more gains are possible, we can’t rule out a decline in the near term.

AUD/USD

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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