AUD/USD climb beyond 1.03 together with the stocks rally in Asia. This move was sparked by the strong growth print from South Korea, with Q1 2013 GDP growth accelerating to 0.9% Q/Q, the highest since Q1 2011.
This increase in risk appetite reversed the initial early bearishness. Price attempted to break 1.03 during early European hours but was thwarted by the numerous sell order around the level. US trading session aided the bears greatly with a worse than expected print for Durable Goods Orders. Price went below 1.025, finding some interim support before pushing back up to 1.028. It is important to note that both dips during US and early Asian session did not move beyond the slide seen after yesterday’s lower than expected CPI data. From that we can infer that underlying bulls may not be as weak as we thought.Price has just retested the 1.03 level shortly after breaching it and came out with flying colors. As long as 1.03 holds, price will be able to retest the swing high of 19th April once more.
Daily Chart shows the importance of 1.03 on the overall directional outlook of AUD/USD. A breach of 1.03 is a good sign that the 1.03 -1.06 trading zone may be explored once more. However, price should ideally past the 50% Fib above 1.035 to affirm bullish intent. Current rally is the only long green candle amidst a sea of red and bulls will do well if we manage to end tomorrow with yet another green candle, thus forming a 3 white soldier bullish reversal pattern.
Stochastic readings are encouraging, with a cross between Stoch/Signal occurring yesterday. A confirmation of the bull cycle may appear should reading levels continue to climb beyond the 20.0 level, in conjunction with 1.035 break and the formation of 3 white soldiers to give us the most bullish signal since early Mar. However before we get all too excited, it is pertinent to point out that current bearish pressure must still be considered to be in play before any evidence of bullish reversal presents itself. As such, traders are again advised to exercise caution before committing into any directional scenarios to prevent any heuristic biases that we may still possess.
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