In the upcoming Tuesday Asia session, the Reserve Bank of Australia will be giving its latest monetary policy statement and interest rate decision, which will likely bring short-term volatility to the Australian dollar. Whether or not we’ll see a bullish or bearish reaction remains to be seen, but here are a few simple technical setups on AUD crosses to help ya play either direction, whatever your biases may be.
For those in the Aussie bull camp, this downtrending market on EUR/AUD may be your cup of tea. Since the beginning of August, the pair has been in a slow grind lower from the 1.6800 area to reach as low as 1.5900 at the beginning of September. From there, the bulls managed to recover to a broken minor support area around 1.6300 where the bears easily blocked the bulls from advancing any further.
From a technical standpoint, this pair looks ready to return to the downtrend, and if we get the right catalyst from the RBA (i.e., a hold off of rate cuts for the rest of 2019), a retest of the 1.5900 is likely a given sometime this week.
If you’re an Aussie bear, AUD/CHF may be the pair to look at as the pair is already back into it’s longer-term down trend after finding resistance and reversing lower from the 0.6900 handle. The pair is now testing the rising ‘lows’ pattern that’s developed from the August support area around the 0.6550 handle, but if we see bigger than the 25 bps rate cut expected of the RBA by the markets, that rising ‘lows’ pattern could be easily broken.
Keep in mind too that this pattern can also be viewed as a consolidation pattern ready to break out, and a rip above the 0.6800 – 0.6850 area is a technical cue to get interested in a longer-term setup if the the catalyst is right.
Finally, AUD/CAD is a pair that currently has a bearish lean with its fall from 0.9150 this month, but arguably with it testing a major support area just above the 0.8900 and the RBA decision soon, this pair can go in either direction from here. An fortunately, this should be a relatively easy decision to make after the RBA event; it’s either a breakdown/retest/hold after a dovish RBA scenario (explained above in AUD/CHF) or a bounce from 0.8900 after a bullish RBA event for the Aussie dollar.
Both directions have clear invalidation areas and when using the daily ATR of 50 – 60 pips as an exit guide, a reachable target within the next session or two, or can be converted to longer-term swing play for a potentially bigger return.