Technical Tools

Support and resistance (S/R). Price levels, trendlines and Fibonacci retracements. Price action, candlestick and chart patterns. Simple moving averages (SMA). Commitments of traders (COT) indicator, which displays speculative positioning in FX futures market, used as a proxy for speculative positioning in spot FX market.

Weekly Chart


The pair convincingly broke above the confluence of the 2015 support-resistance line, broken long-term trendline drawn off of 2001 and 2008 lows and 50 week SMA, near 0.7350. The confluence shall now act as a support. 38.2% retracement of the 2014 - 2015 downswing is the next target.

Speculative Positioning

Speculators in the Australian Dollar futures market have been net short the currency for the most of the past year. Net position flipped to the long side in February and is currently standing at 18.0K, after it was up at 29.2K two weeks ago.

Daily Chart


After it rose four cents in January and February, the pair broke above 200 day SMA, slicing through the above-mentioned confluence. 550 pip rally in March appears to have been a bit overdone and the pair is in the pullback mode at the moment. 0.75 is the immediate support.

Fundamentals

The RBA are basically on hold but stand ready to cut rates further if conditions would warrant - which is not the case at the moment as the economy appears to be recovering. The Fed are in the middle of the tightening cycle but have sent some dovish signals in the recent weeks which is risk positive.

Prediction

Taking into account all the above-mentioned factors, I expect the pair to be trading near 0.7625 towards the end of the forecast period which will conclude on the 1st of May, 2016, at 12:00 GMT. Ideally, the pair will follow the expected price path as outlined on the charts.
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