Australian Retail Sales expected to show +0.4% gain in January

The AUDUSD extended to new highs today, peaking at 0.7859. The high was near the swing highs seen over the last month or so, and also the 200 bar moving average on the four-hour chart (see green line in the chart below currently at 0.7858).

The better dollar tone today (especially against the EUR and the GBP) has helped push the pair back to the downside. The 38.2% of the move from the February 12 low to the high reached on February 26 comes in at the 0.7809 level. That is near where the market currently trades.

Below that level is the 100 bar moving average on the four-hour chart. That level comes in at 0.7796. The 100 bar MA was tested in the Asian session and found support buyers.

With the pair sitting between the 100 bar MA at 0.7796, and the 200 bar MAs at 0.7858, the market is saying that it awaits the next push.

That push may come in the form of a surprise from retail sales or trade balance figures for the month of January. Both will be released later (at 7:30 PM ET/1:30 AM GMT). The expectations for retail sales are for a 0.4% gain vs. a 0.2% gain in December. The trade balance is expected to show a -925 million deficit. Any deviation and the risk defining levels could be broken.

On a move to the downside additional support comes in at the 0.7777 level. This is the 50% retracement of the move up from the February 12 low. Below that 7745 – 50 represents the low price from March 3 and the 61.8% retracement. The 0.7720 is another low swing point. The price moved below this level on two separate occasions over the last 5 weeks of trading, but failed on each break.

On a move to the upside, the price will need to get and stay above the 0.7858 level..

Since January 29, the market price for the AUDUSD has traded mainly between 0.7720 and 0.7858 (i.e, between the yellow areas in the chart above). Breaks outside of this range have been unsuccessful. However, at some point the market will make a break and run. The longer we non-trended the better chance for a trend.

As a result be on the lookout for a surprise in the data tonight, and a subsequent trend like move outside of the current trading range.

Be aware. Be prepared.