AUD/USD: Bulls in control heading into 2016

<p>Markets are off to a relatively quiet trading start to the historically low-volatility week between Christmas and New Year’s. As of writing, European equities are […]</p>

Markets are off to a relatively quiet trading start to the historically low-volatility week between Christmas and New Year’s. As of writing, European equities are trading down slightly (with the exception of the UK’s FTSE index, which is holding on to negligible gains), the dollar is essentially flat, and major commodities including gold and oil are falling once again.

Against this backdrop, the AUD/USD’s flat start to the week is relatively impressive. The Aussie traded higher every single day last week after finding support at its rising bullish trend line, keeping the cautiously optimistic outlook for 2016 in play. Meanwhile, both the MACD and RSI indicators remain in bullish territory, bolstering the case for further gains as we flip our calendars to 2016.

Not surprisingly, there are few major economic data releases scheduled but there are a few reports to keep an eye on. Out of the US, traders will look forward to tomorrow’s Consumer Confidence report, which will cover the critical holiday shopping period, along with Wednesday’s November Pending Home Sales report and Thursday’s release of initial unemployment claims and Chicago PMI. While the economic calendar is completely barren Down Under, Thursday’s PMI reports out of China will shed some light on how Australia’s largest trading partner is doing and could therefore have a notable impact on AUD/USD.

Amidst the current low liquidity conditions, the next 100 pip move in AUD/USD will be difficult to judge, but the medium-term bias will remain in favor of the bulls as long as rising trend line support around .7120 holds. Therefore, bulls may look to fade a near-term dip if seen, with the potential for an eventual move up to key previous resistance and the 200-day MA, in the .7380-.7400 range.

AUDDAILY12-28-2015 9-10-12 AM

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.