AUD/USD rose as high as .7797 after the labor force report showed a surprising increase with employment climbing 37,700 full-time jobs to 11,720,300. The unemployment rate also dropped to 6.1% in March, from a downwardly revised 6.2% in February. The robust labor figures come as a surprise and might give reason for the Reserve Bank of Australia to keep rates steady at the May meeting. Further easing by the Bank is still expected, so we may see limited strength from here.
The 240-minute AUDUSD chart shows the rally that began with last night’s employment data release is tentatively respecting the upper boundary of the of a bullish channel that began in early in April. Price is also respecting the 127.2% Fibonacci expansion level of the slide from .7737 to .7552.
To the upside, .7850 will serve as major resistance, as it could provide the formation of a bearish Gartley pattern. Point D could be confirmed both with the 78.6% Fibonacci retracement level of the X to A leg and with the 161.8% Fibonacci expansion level of the B to C leg.
If bullishness is already maxed out, key support will come from the 50-day SMA, which is currently at .7730. By the middle of summer, we may see price make a strong attempt at both the .7500 handle, followed by the .7000 price barrier.
The trade: SELL AUD/USD at .7850, with a stop loss at .7950 and take profit at .7550. The risk/reward ratio is 1:3
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading