Retail Sales and GDP to be released in China
The AUDUSD has been plodding along over the last 5 days after reaching a new low at 0.73713 on Wednesday. The corrective high has taken the price to as high as 0.7496. The midpoint of the non-trending range comes in at 0.74335.
The consolidation has allowed the 100 hour moving average to catch up with the price. Since Thursday, the AUDUSD price has traded above and below that moving average line. The 100 hour moving average has also flattened out, indicative of a non-trending market.
The 200 hour moving average (green line in the chart above) has also started to catch up with the price. Today, after the weaker than expected US retail sales, the price tested the 200 hour moving average level at the 0.7474 level. The high reached 0.74777 before rolling back over toward the 100 hour MA.
Activity has slowed to a crawl over the last 6 or so hours with the price confined in a 16 pip trading range.
When moving averages start to converge, when they start to move sideways. When the market trades in a narrowing trading range, then I start to anticipate some action, some catalyst for a push or shove outside the range. It becomes for the market to start to move. What might be a catalyst.
In Australia in the new day Westpac consumer confidence for July will be released along with the motor vehicle sales. Consumer confidence came in at 95.3 last month, while one vehicle sales in May were down -1.3%. There are no estimates for each.
A larger influence may come from China. Australia relies on export growth to China. Hence how China goes, has an impact on how Australian goes.
Specifically, China will release retail sales for the month of June(estimate 10.2%%. Year on year), industrial production (6.0%. Year on year),and GDP for the 2nd quarter (6.8%. Year on year and 1.6% quarter on quarter). All will be released at 10 PM Eastern time./200 GMT). GDP at 6.8% represent the lowest since 4th quarter 2008.
On weaker data, expect the market to move toward a test of the lows from yesterday and last week (below 0.7371. A move below that level will open the door for further downside momentum. The next target would be the bottom side trend line support from the weekly chart (see chart below) at the 0.7269 area (see chart below).
On stronger than expected data, a break of the 200 hour MA (green line on the hourly chart above) at 0.7468 will next look toward the high from last week at the 0.74957. The 38.2% retracement of the move down from the July 1 high comes in at 0.7511(see chart above). the high from July 6 at 0.7532, and finally the 50% retracement of the same moved to the downside comes in at 0.75545 (see chart above).
Non-trending transitions into trending. Often times, there is a little bit of a push or shove to get the market juices flowing. We will see if sides data can provide that momentum.
Be aware be prepared
