Today, we’re checking out AUD/CHF as the pair pulls back from its downtrend over the past couple of weeks. Another shorting opportunity at a good price?
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on AUD/JPY as it formed a falling wedge, so be sure to check that out to see if there is still a potential play!
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 12670.77 -0.52% FTSE: 5815.75 -1.25% S&P 500: 3463.95 +0.61% NASDAQ: 11605.59 +0.77% |
US 10-YR: 0.828% +0.012 Bund 10-YR: -0.576% +0.012 UK 10-YR: 0.274% +0.032 JPN 10-YR: +0.034% +0.005 |
Oil: 40.96 -1.77% Gold: 1928.40 +0.67% Bitcoin: 12877.29 -0.03% Ethereum: 412.17 +4.69% |
Fresh Market Headlines & Economic Data:
Stocks are flat as traders weigh stimulus uncertainty vs. strong earnings
U.S. weekly jobless claims push lower; many exhausting their benefits
Pelosi says COVID-19 relief talks on ‘good path’
Decline in UK manufacturing activity slowed from July slump but remains weak – CBI
Sunak stumps up more cash for COVID-hit businesses
Upcoming Potential Catalysts on the Economic Calendar
New Zealand CPI at 9:45 pm GMT
Australia Manufacturing & Services PMI at 10:00 pm GMT
Fed Kaplan speech at 10:00 pm GMT
Gfk Consumer Confidence at 11:01 pm GMT
Japan Inflation rate at 11:30 pm GMT
Japan Manufacturing & Services PMI at 12:30 am GMT (Oct. 23)
U.S. Presidential Debate at 1:00 am GMT (Oct. 23)
What to Watch: AUD/CHF
On the one-hour chart above of AUD/CHF, we can see that the pair has been in a clear downtrend but bouncing higher at the moment.
The pair is now trading at the Fibonacci retracement area of the most recent swing move lower from 0.6500 – 0.6370, which is also a broken previous minor support area.
With the pair pulling back a full 61% and stochastic slowly coming out of overbought territory, the odds are growing that technical traders could be starting to short again.
From a fundamental perspective, a short trade makes sense as broad risk sentiment is leaning negative on the session as faith in a new U.S. stimulus has been fading.
If those conditions hold and we see weakness in the upcoming global business sentiment data, forex traders could jump in to push AUD/CHF back into the downtrend.
If that scenario plays out, look for the pair to make another run lower to the swing lows around 0.6370, which is within reach in a session or two given the daily ATR range of around 50 – 55 pips.
Of course, if we see an agreement on U.S. stimulus announced, or another positive risk theme (e.g., positive COVID-19 vaccine/therapy news, improving global business sentiment data, etc.) then the Aussie could rally against the Swiss franc, making a break above the 61% the pattern to watch for a potential short-term long position and move higher to 0.6500.
