Market Outlook and Analysis (Oct2019 Week3)

Currency Pair: AUDUSD

Fundamental Analysis – AUDUSD

AUDUSD continues to be linked to the risk appetite, recently determined by the trade talks between US and China. The Australian economic data signalled a sluggish economy. Then a renewed hope for an agreement in the US-China trade war boosted the AUD towards the end of the trading week. The pair managed to hold on to the gains for the week.

The US came to a substantial phase 1 deal with China. The stock market (Dow, S&P 500 and Nasdaq) rose 1.1-1.3% respectively. However, the gains lost momentum towards the end of the trading day as the deal lacked details.

Technical Analysis – AUDUSD

AUDUSD D1 Chart – Bounced off 2019 lows

We could potentially be seeing a recovery of the AUD weakness against the USD fuelled by the positive news on the trade negotiations. The pair is currently at a temporary resistance level.

AUDUSD H4 Chart – Caution on Bearish Bat Pattern

Pair at temporary resistance and RSI oversold, we could potentially see some retracement at the beginning of the trading week. However, with the positive progress on the trade negotiations, we should see the pair extending the rally.

Throwing caution into the air when taking a trade at the completion of the Bearish Bat pattern. Expect to see AUDUSD going much higher if we see more positive news emerging from the trade negotiations.


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