AUD/USD Poised For Major Bullish Breakout

The Australian dollar inched higher against the greenback on Wednesday, taking the price of AUD/USD to more than 0.8213 ahead of US unemployment and housing data. Today, the pair managed to settle above a descending trendline on the daily chart that has raised hopes for more strength in the Australian dollar in near future.

Technical Analysis

As of this writing, the pair is being traded around 0.8192, few pips above the opening price 0.8181. The price rose to .8215 during the early hours of Asian session but is being pulled back because of bearish pressure. On the upside, a resistance can be seen around 0.8281, the 23.6% Fib level, ahead of 0.8400, the psychological number and 38.2% Fib level and then 0.8500, the confluence of trend line, 50.0% Fib level and 50-Day SMA, as demonstrated in the following chart. However, the pair is trading above the trendline, validating a chance for a bullish breakout. A successful breakout will validate a rally towards the 0.8300 handle.

audusd

On the downside, a support can be noted around 0.8086, the yearly low and swing low of December 23rd. Success in breaking this support will let the pair to print a fresh yearly low.

The overall bias however is bearish because of lower highs on the daily chart. The bias will remain bearish as far as the resistance area 0.8913 is intact.

US Initial Jobless Claims

The US initial jobless claims remained 288K last week, higher than 280K in the week before, says the average forecast of different economists. Generally speaking, a low figure is bullish for the US dollar and vice versa. Thus, better than expected outcome may further support the bearish momentum in the price of AUD/USD.

US Pending Home Sales

The US pending home sales remained at 0.6% this December better than -1.1% in the month before, as per the median projection of different analysts. Being a sensitive figure to US economy, a higher figure is considered bullish for the US dollar. Thus a better than expected figure may cause bearish pressure in the price of AUD/USD.

Trade Idea

Considering the overall technical and fundamental analysis, buying the pair is preferred if the daily candle closes above the trend line.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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