The Australian dollar was one of last weeks worst performing major currencies. Investors believe this is mainly due to a slowdown in the jobs market, whereby employment change fell for the second month in a row, full time employment dropped by -53k, and china, one of Australia’s main trading partners, has also shown a slow down in economic activity, printing a negative trade balance and an overall drop in economic productivity; all compounding the negative effects towards the Australian dollar. It is very possible we see a continuation of the downside correction in the coming week. The COT report does show a larger portion of net longs than net shorts on the Aussie dollar, and there is also Australian CPI data coming out on Wednesday, with positive a 0.5% increase forecasted relative to the previous 0.4% increase. So price and data will have to be monitored carefully before action is taken. I have provided a top down analysis ( from daily to h4 to hourly) below.

Price is forming an ascending triangle, as shown by the red lines, and a series of higher lows from the bottom, and no higher highs at the top of the range, indicate by the arrows. thus a breakout to either side is expected. We have come close to both mr1 and ms1, and price is currently at the mpp, with the moving averages beginning to flatten out, it will be interesting to see how the bulls and bears fight it out. based on the data mentioned above, I will remain bearish on this pair.

As shown by arrows and text on my chart, we have an initial move upwards, followed by a higher high, a higher low, another higher high, and then what I perceive to be a questionable new higher low, which could be indicative of a change in the short term 4 hourly trend. price is also at the 61.8 fib level, so it is possible that we form a double bottom at this level, and continue moving to the upside, so I am fully aware of how a bull may be viewing this pair, and will take caution with my entry.

On the hourly time frame, It is evident that we are in a downtrend, shown by the arrows on the lower highs and lower lows. I will look to enter at the fib zone role reversal area indicated by the 3 arrows on my chart. it is an area where price had found support previously, and I believe it will act as support in the week to come, hopefully taking us to either the bottom of the triangle, or to it;s break.

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