Hey traders! Welcome to this mid-week market analysis where I'll be looking at GBPAUD, USDCAD & AUDUSD.
For several weeks now, I've been pointing out the bearish order block (OB) at 1.82 and looking at it as an area of a potential reversal in the market. We did see one small wick reach outside the OB; however, on the most part, price had been consolidating around the 90% mark in this zone, and I shared in the Telegram that I am going short. Eventually, price did in fact reverse right from this exact zone, and price has now made it's way to our target levels which was the EQL at 1.78. Price broke out of the short-term ascending channel, and it's looking like price is not looking to stop falling anytime soon.
The pound is much weaker at the moment after news that the Bank of England's Chief Economist, Andy Haldane, will be stepping down from his role after the Bank's monetary policy committee (MPC) meeting in June 2021. Haldane is seen as the only hawk on the MPC so his departure could signify marginally easier monetary policy than would otherwise. Traders argue that the BoE is now less likely to increase interest rates in fear of inflation rising.
Overall, I am continuing to be bearish on this market as both technicals and fundamentals line up towards a bearish GBP, which means price should continue falling unless there is a significant outbreak that spikes the Pound the other way.
This market has been consolidating for many weeks now around this liquidity area, also known as a liquidity void (LV) where price was meant to collect liquidity then continue the long-term trend initially. We can now see an almost triple top at 1.2635, and price is now staying just below the channel's bottom at 1.25. Technicals are still lining up towards a bearish move on this pair, as we are still yet to see a significant break above the LV, and it's been around that level for weeks!
The Bank of Canada's quarterly business outlook survey suggests higher expectations for future sales and generally more substantial economic growth. The survey increases the probability that the BoC will announce a reduction in its bond-buying program at its meeting next week, and if this happens, we could easily see a bullish impulse for the CAD.
Overall, I continue to be bearish on this market as there are not yet any signs of a bullish break in this market, and the CAD continues to grow stronger against the USD, pushing price lower and continuing the long-term market downtrend.
It looks like price has in fact respected the channel bottom within this long-term ascending channel that price has been respecting and is now making its way to the upside. We did see a lot of consolidation for a while, as price wasn't sure which direction to head in, however we're now pips away from touching the EQH at 0.78. If we see a significant break above, this could hint at continued bullishness in this market, and we could see price head towards the top of this long-term channel and continue the trend.
Today, Australia reported that the Unemployment Rate declined from 5.8% in February to 5.6% in March compared to the analyst consensus of 5.7%. Employment Change report indicated that employment increased by 70,700 in March compared to analyst consensus, which called for growth of 35,000. This stronger-than-expected report provided additional support to the Australian dollar.
Overall, I am pretty mixed but leaning on the bullish side on this market at the moment, as both technicals and fundamentals are following for a bullish AUDUSD. Tomorrow, traders will also focus on the latest Retail Sales data, which is projected to grow by 5.9% month-over-month in March due to the positive impact of the new round of economic stimulus. If this does happen, we may infact, see price retrace the moves it has been making in the past couple of days.
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