Following up with the Australian inflation release earlier tonight, I expect to hold my trades for longer than anticipated.
Australian inflation figures came out on a softer note with the quarter over quarter CPI at 0.6% falling short of the 0.7% expectations. With this, it continues to remain unlikely for the Reserve Bank of Australia to raise rates.
While the Australian dollar sold off against all major pairs, the technical setup remains the strongest over against the franc. For example, the bearish bar over on the AUDUSD pair remains insignificant given the huge uptrend.
At the moment, I have a take profit set at an intra-day level in a resistance turned support area. This support level is actually quite fresh as price made this abrupt drop and reversal. This level doesn’t appear to be too influenced by fundamental factors so it signals a critical point where traders have began scaling in long entries.
This trade also does not have much fundamental backing. I’m simply riding the trend as the correction appears to be over and we are about to experience another wave of bullish momentum.
Last session’s close ended with a doji signalling major indecision. This indecision was based off an upper range bound that is currently to be tested. Given that this pair sold off from January 8 to 10 and then recovered nicely on the 11th and 12th, bearish pressure remains incredibly short-lived. As short interest reduces, I believe this pair has more room for its upward momentum.
Finally, this pair continues to confirm the daily support. It is holding up partially thanks to the weakness in the Canadian dollar. New Zealand’s economy is experiencing solid growth and low inflation. This certainly is reflected in the strength of the New Zealand dollar. From a technical standpoint, this is my key pair to watch this year or at least for the months ahead.