The Australian dollar rallied after last night’s GDP report showed that economic growth in China climbed 7.3% in the third quarter. The release highlighted an improvement in export demand and the service sector. Industrial production also rose 8.0% in September. The positive data points should keep Chinese government on hold regarding implementing further stimulus measures.
My last Aussie post highlighted that since price formed a death cross signal on September 9th, the bear market move was confirmed and price declined steadily from .9300 all the way down towards .8642. The freefall however may be over for now as the double-bottom pattern I identified earlier is still valid.
The daily chart for AUD/USD displays the recent consolidation between .8650 and the .8900 level. The oversold Australian currency may see bullish momentum target .8900 level initially and eventually a test of the 50-day SMA which is at .9032. If we see a major USD rally, critical support remains .8650. If that level is taken out, bears may target .8450.
The trade: Buy AUD/USD at .8800 with a stop loss at .8750 and a take profit at .8900. The Risk/Reward Ratio is 1:2
Edward J. Moya
WorldWideMarkets Online Trading