July 2, 2022
  • July 2, 2022

Weak reverse C&H pattern signals

By on July 5, 2021 0

The pair will likely resume the downtrend since this setup is usually a sign of a bearish continuation.

Bearish view

  • Sell ​​the AUD / USD and add a profit taking at 0.7460.
  • Add a stop-loss at 0.7580.
  • Lead time: 1-2 days.

Bullish view

  • Set a buy stop at 0.7530 and a take-profit at 0.7600.
  • Add a stop-loss at 0.7480.

AUD / USD was little changed early in the session as investors mulled over the latest US non-farm payrolls (NFPs) and the Reserve Bank of Australia‘s (RBA) upcoming decision on interest rates. The pair is trading at 0.7520, about 1% above last week’s low.


RBA decision to come

The main catalyst for the AUD / USD will be the RBA’s latest interest rate decision slated for Tuesday morning. Analysts expect the bank to keep interest rates intact at 0.10%. They also expect the bank to appear a little accommodating due to the continued threat from the Delta variant of the coronavirus. As such, the bank is likely to maintain its asset purchase program as it attempts to stimulate economic recovery.

The move comes at a time when the Australian real estate industry is booming. Home prices soared as buyers took advantage of weak mortgage prices. This trend is likely to continue for some time as the shortage continues. Data released today showed construction approvals fell 7.1% in May after falling 5% in April. Private housing approvals fell 10.3%.

AUD / USD was also little changed as investors reacted to the latest services PMI data. According to Markit, the country’s services PMI index fell from 58.0 in May to 56.8 in June. At the same time, AIG’s construction index fell from 58.3 to 55.5.

AUD / USD is also reacting to the latest US non-farm wage data released on Friday. The data was relatively mixed. For example, as the economy created more than 850,000 jobs in June, the unemployment rate rose to 5.9%. Wage growth was also slightly lower than expected. Still, the numbers provided further evidence that the labor market is tightening.

AUD / USD technical analysis

The two-hour chart shows the AUD / USD rebounded from the latest NFP data. It rose from last week’s low of 0.7445 to a high of 0.7530. On the two-hour chart, the pair moved slightly above the 25- and 15-day exponential moving averages. It also broke through the important support at 0.7463. The pair also forms the handle section of the mug and reverse handle model. Therefore, the pair will likely resume the downtrend since this pattern is usually a sign of a bearish continuation.