Trade Setup
- Entry: Buy on a move above 0.7040, with a stop-loss at 0.6950.
- Target: Hold for a move toward 0.7110.
The Australian dollar opened higher on Monday but is encountering resistance at the 200-day EMA—a level that has proved troublesome over recent sessions. The key question is whether this forms a double bottom within a broader consolidation zone. Traders will need to assess whether a decisive breakout from the recent trading range is imminent.
While that scenario is plausible, a sustained bullish case would likely require a break above 0.7040. Alternatively, short-term traders may look to fade the move and fill the gap within a range-bound framework, potentially using the one-hour chart. Incorporating the stochastic oscillator could provide earlier signals.
The pair has already entered overbought territory and begun to roll over. Trading this reversal requires agility, though a clear directional bias remains uncertain.
The structure still resembles a basing pattern. However, the Reserve Bank of Australia faces headwinds after last week’s employment report showed a loss of 39,600 jobs, far below the expected gain of roughly 20,000—a significant negative surprise.
Whether the Australian dollar is turning more dovish remains to be seen. The 0.6850 level continues to act as support, while 0.7250 serves as resistance. A decisive move above 0.7040 would confirm a bullish breakout; otherwise, the pair is likely to remain range-bound.