Aussie Dollar Awaits Rate Decision

This is going to be a very tricky week with a lethal cocktail of central bank meetings and US payrolls. Today I’m looking at the Aussie Dollar and Ryanair charts.

AUDUSD
I mentioned last week that there’s a lot of talk in forexland about several major reversals lining up against the US Dollar. The Canadian Loonie was one, the Aussie and Kiwi Dollars are also in the frame. Today I’m taking a quick look at the Aussie ahead of the overnight decision on interest rates.

Market consensus is for a 0.25% rise in Australian rates but some are looking for a half-point rise, following a 6.2% annual rise in house prices earlier today. The Aussie dropped briefly below the $0.90 mark last week, but recovered throughout today, given an added boost from the stronger than expected US data.

The daily chart is as muddled as opinion in the market; the MACD reflects the recent downside bias, but the RSI remains above 50. The Parabolic SAR is in ’sell’ mode, but the 21-day moving average is still in uptrend. The price had broken below the moving average, but today’s move has brought it back in line. The long-term uptrend line remains intact for now, but equally there’s a tasty downtrend line forming.

No heroic predictions here; the Dollar reversal trades will be worth a few hundred points when they take off, but trying to second-guess the market could be painful in the short term. Patience will be the order of the day for this move. In the short term I’m looking for the downtrend line to hold overnight for a possible trade down to $0.90, but I think this will be a week for trading, rather than taking long-term views.

On the other hand, if the stockmarket volatility is short-lived, the weak Dollar trade could be the name of the game again, seeing the Aussie push back up to the recent $93.30 high.

Ryanair
Ryanair has had a lousy time of late, encapsulated by this morning’s new low of €2.65. Better than expected profits were accompanied by a very downbeat outlook.

The chart is about as cheerful as a Ryanair flight, but there could be a good long bet in there. Although the Parabolic and MACD are emphatically downbeat, the RSI at 24 is oversold and the price closed on a classic Hammer reversal candle at the bottom of a downtrend.

I’d look for a move above today’s high of €2.93 for a possible bounce to test the 200-day moving average at €3.20 and then the 21-day moving average at €3.27.

However, with a falling 21-day moving average I wouldn’t get too carried away on the upside. I’d look to take my profits or at least cover my entry point with a stop loss fairly sharpish.

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