China is considering allowing local governments to sell $220 billion worth of bonds in the 2nd half of the year in order to accelerate infrastructure funding. The measures are aimed at stimulating the economy which has been impacted negatively by the Covid shutdowns.
The speculation helped to push the AUDUSD higher today after the pair traded to the lowest levels since July 2020 over the last 5 trading days.
- The low price last week reached 0.67633.
- The low price from Tuesday this week reached 0.67608.
- The low yesterday reached 0.6761.
- The low today reached 0.6764 before bouncing higher today.
Needless to say the pair has been trying to form a bottom.
Technically, looking at the daily chart above, the price lows had traders leaning against a key downside technical target (the current price is trading at 0.6827). At the lows, the price was testing the 50% midpoint of the move up from the March 2020 low to the February 2021 high price. That midpoint level comes in at 0.67638 (see chart above) which was just above the low prices from last week, and this week (see daily chart above). Holding the level gives the dip buyers some hope that the bottom may be in place.
What would give buyers more confidence that the lows are in place?
Drilling to the hourly chart below, the price rise today has seen the price move back above its 100 hour moving average at 0.68171. That is a step in the bullish direction.
However, the 200 hour moving average at 0.68587 (green line in the chart below), remains a technical hurdle that would need to be broken - and stay broken - if the buyers are to take more control.
On Tuesday, the price tested that 200 hour moving average level only to find sellers near the level.
Since June 8, there have been 6 days when the price has traded above the 200 hour moving average. However, those breaks were short-lived as momentum soon faded.
As a result getting above the 200 hour moving average and staying above is a key barometer for buyers and sellers going forward.
Conversely, a move back below the 100 hour moving average would hurt the short-term bullish bias and likely lead to buyers turning to sellers once again.
Trading analysis offered by RobotFX and Flex EA.
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