AUDUSD chart since the beginning of this month seemed frighteningly jagged, full of sharp reversals from both direction of the market in a range of almost 300 pips. However, there is no trend that does not end. The current AUDUSD erratic movements too, at some point will meet its breakout.

AUDUSD chart since the beginning of this month seemed frighteningly jagged, full of sharp reversals from both direction of the market in a range of almost 300 pips between 0.86-0.89. In the newest entry of seputarforex trading journal, it is concisely summed up as, AUDUSD is confused where to go, either go up or down. However, there is no trend that does not end. The current AUDUSD erratic movements too, one day will meet its breakout point, be it to the upside of to the downside.

AUDUSD

 

Messy Fundamental

Fundamentally, Aussie is quite a mess. This morning, CNBC reported that market sentiment in the country has fallen. A survey by Fitch Ratings earlier this week indicated that investors are concerned on market and housing condition. In the second quarter, only 43% of respondents in the same survey considers downturn as high or moderate risk, but now there are 79% who think so.

Mining industry that has been responsible in launching Australian economy currently is in precarious condition, due to Chinese slowdown that has led to lower demand, low metal prices, and other factors. Business confidence too, have more than halved in the last twelve months. September NAB Business Confidence was just 5, although it was recorded at more than 10 in September 2013.

Indeks

NAB Business Confidence index is based on monthly survey on a couple of hundreds Australian companies done by National Australia Bank (NAB). The index measures expectation among companies on Australian business condition for the following month. Among all of Australian fundamentals, NAB is considered as one of the most important, and its drop could be considered as a sign of economic slowdown.

On the other hand, rising housing prices have ignited worries that Australia is in the beginning of a housing bubble. CNBC mentioned that housing prices has risen 9.3% in the last twelve months that ends in September 2014, because of RBA record low rate. The problem here is that house prices rise when employment worsens, which means that there are wide gap between property markets outlook with its consumers' ability to buy. It needs to be noted, the number of working people has lessened as much as 29,700 in September, and unemployment rose from 6% to 6.1%. Consequently, there are whispers that RBA will need to trim its rates.

Meanwhile, market expectation for sooner Fed rate hike in the US slowly diminished due to the central bank officials doubt on US economic recovery. One of the Fed regional heads, James Bullard, even said in an interview with Bloomberg that the Fed need to keep the rest of the QE, suspend tapering for some time, in order to support target inflation. The missing clues among the two central banks, the RBA and the Fed, is one reason why market is confused.

 

AUDUSD Technicals: Between Kangaroos And The Bears

Technically, AUDUSD has attempted to break important support level at 0.8650 to no avail. On the other hand, AUDUSD has failed to turn bullish although it has stepped out of resistance at 0.8829 several times now.

AUDUSDAUDUSD pair in H4 with EMA-200 (magenta), EMA-60 (blue), EMA-20 (red), and fibonacci retracement

From observation of AUDUSD in timeframe H1, H4, and D1, we could say that ranging movements will remain for some time. But it needs to be noted that before it is ranging, it suffered heavy downward pressures, down from around 0.93 to 0.87. MACD in Daily timeframe have oversold, but in lower timeframe, it appears as if AUDUSD has attained new equilibrium around 0.87.

Therefore, next trend will be determined by breakout, either on the upside or on the downside. Due to AUDUSD failure to lock position over 0.8829 at last Wednesday, we could seriously consider the possibility of continued September bearish movement if price breaks out of support level at 0.8650. Conversely, if it does not happen, then Aussie might go bullish for real.