Aussie dollar recovers on good China data, but technicals pointing lower

Markets are slightly in risk-on mode after good China trade balance numbers. As usual the Australian dollar will be impacted the most on any news from China, so the currency found support in Asia trading and is now one of the strongest on the day despite the fact that employment figures reported in Australia came out worse than expected (-10.2K vs. 6.2K exp.).  

Technically speaking, AUD/USD (FOREX:AUD/USD) still has only three legs up on the hourly chart, which we know is a structure of a corrective, contra-trend price action. We also should not be ignoring the larger bearish trend evident on the weekly or daily level. As such, we are ready on AUD weakness, but need some confirmation from the market first. We are talking about possible impulsive decline from current levels and back to 0.8970 or even lower. If we get this type of a fall, then bearish bias will be confirmed and we will be interested in going short AUD against the USD.  If we don’t get five waves down in the near-future then obviously it’s better to stay aside and look for opportunities on some other pairs.

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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