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Australian Retail Sales a Strong Beat

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Technical analysis of Forex market

Australian Retail Sales were released earlier today for the month of November at 0.9% vs 0.2% expected and 0.1% last.  Although the data was for November, it does not underscore the strength of the data point.  This number is the strongest monthly Retail Sales print in over 2 years for Australia!  We will need to see if this data can carry forward over the next few months, especially with the US-China “Phase One” trade deal agreement, which could be signed as early as next week.

AUD/USD had been trading in a downward sloping trend since mid-2018 from a high of roughly .7675 down to a low of .6675.  In mid-December, the pair broke higher out of the channel to the 200 Day Moving Average near .6900 and pulled back to retest the upper trendline of the descending channel.

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Source: Tradingview, FOREX.com

On a 240-minute timeframe, the pair traded up to the 161.8% “Golden” Fibonacci retracement level near .7035 from the highs October 31st, 2019 to the low on November 29th, 2019.  When the new year opened, the pair pulled back as Middle East tensions grew and wildfires spread throughout Australia. Fears mounted that economic data may take a hit.  .6930 seems to have acted as a “line in the sand” for AUD/USD, and once this was broken, the pair moved lower to .6850.

Source: Tradingview, FOREX.com

On a 60-minute timeframe, AUD/USD tried to take out the .6850 level numerous times over the last few days, only to bounce off that level each time.  As the pair moved higher today, the 60-minute RSI moved into overbought territory.  Price closed the day near .6910, only 10 pips away from the 38.2% Fibonacci level from the highs on December 31st (the “Golden” Fib level on the 240-minute timeframe) to the lows of the past few days near .6850.

Source: Tradingview, FOREX.com

Just above these levels is once again .6930.  If AUD/USD is to break higher, or gap higher over the weekend, the pair can quickly move up to .7000.  However, if .6930 holds, the pair has room to move lower back towards .6850.  Keep a close eye on comments from the US or China regarding the signing of the trade deal next week, which may affect the price of AUD/USD.