The Australian dollar enjoyed a positive inflation read among other reasons, and advanced. What do the charts tell us?
Here is their view, courtesy of eFXnews:
Trend: The recent bounce completed a bullish weekly reversal pattern last week that implies exhaustion in the downtrend and the need for a further period of consolidation/correction. Tuesday’s dip held above ST 61.8% retracement support at 0.6911 (low 0.6919) and the strong close completed a ST continuation pattern, confirming an uptrend bias in the ST.
While the likelihood of further ST gains is high, only a weekly close above the broken triangle base at 0.7150/70 would negate the MT downtrend. A January month end close below 0.7000/20 would complete a further LT bearish continuation pattern and trigger a more bearish multi-month outlook.
Momentum:Â ST Momentum has shifted to a positive bias implying further consolidation/correction in the near term. MT momentum remains negatively biased, highlighting the MT downtrend.
Outlook: Directional bias is now highly conflicted across time frames. As such, price has entered a consolidation/correction phase. 0.6900/30 support should be a firm base in the coming days ahead of further correction towards 0.7100/50. A resumption of the downtrend will depend upon the price response to these upper levels and a return to a negative ST momentum bias.
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