Chart of the Day AUDUSD
AUDUSD Equality Objective & Momentum Divergence - Probable Price Path
S&P Emini futures traded to 3015 this morning in Asia as risk assets are in strong demand. Hopes of an economic recovery resulting from an easing of coronavirus lockdowns and other restrictions are crowding out concerns of an escalation in tensions between the U.S. and China. Adding to the buoyant mood in Asia was a promise by the PBOC to strengthen policy stimulus to help speed up China's economic recovery. The test will come later today when the U.S. returns from a three-day holiday. If the S&P 500 convincingly breaks above the 200-day moving average at 3,000 it will likely force cashed up investors back into equities for fear of missing out (FOMO). BofA's May fund manager survey last week stated that the pain trade for equities was a break above 3,020 in the S&P. The AUDUSD has been tracking the S&P since the start of the coronavirus crisis . If the index sustains a break above 3,000, the AUDUSD would likely make a run 0.6700.
From a technical and trading perspective, the AUDUSD looks poised to test the long awaited equality objective at .6700 with the 78.6% Fibonacci retracement of the crisis decline sighted at .6709. This technical test is also accompanied by some decent momentum divergence as such it would be reasonable to expect at least some profit taking in this area. Bears will be watching for a key day reversal pattern to encourage deploying short exposure to initially target a move back to .6400through here bears will target a test of the pivotal .6150
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