Aussie players are likely eyeing the upcoming Australian jobs data for a potential volatility spike in AUD pairs.
Which is why I’ve got this rising channel in AUD/USD on my watchlist this week!
Think it’ll draw in the bulls or will the bears break the channel down?
AUD/USD has been in a slow and steady grind higher over the past month or so, slowly forming a rising channel on the four hour chart above.
We can also see from the price action that the 0.7150 minor psychological handle has been a strong area of interest. The bulls and the bears have had several battles in that area resulting in short-term consolidation patterns.
The market is about to retest this area of interest and rising channel lows, bringing on the question of whether we’ll see another bounce or if the channel will break this time.
The answer to that may all depend on this week’s big catalyst for the Aussie, the monthly Australian employment report. According to recent business survey results, employers were still in hiring in December, raising the odds that the government report will show job growth and a tick lower in the unemployment rate.
If this scenario plays out, then with this recent dip and the technical argument (rising channels/previous support retest/stochastic oversold signal), then the odds are pretty good 0.7150 could hold as a short-term support area.
Now, if this report disappoints and given the current negative risk sentiment and broad U.S. dollar strength, it’s possible we could see this channel break. Longer-term traders may be drawn to this setup as AUD/USD is in longer-term downtrend since mid-2021, and that this channel is actually a bounce from a big downswing move from November 2021.
So, we’ve got setups for both the bulls and bears to watch out for. Which direction are you leaning towards on AUD/USD?
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