AUDUSD - Chinese data is not helping the bulls

We had some interesting Chinese data overnight with YoY exports gaining 12.7%, smashing the 7.1% forecast which was mainly driven by stronger shipments to the US and EU.  Imports however were only up 5.3%, failing to reach the estimate of 7.6%, which could put the AUD under further pressure. Weaker global commodities prices are also continuing to wane on this currency and more work might be required from the RBA in order to turn the local economy around as well.

The bearish momentum of the USD might also be turning a corner from with the positive data emerging in the economic and job markets, which will inevitably bring us back to the tapering debate / expectations.  Most analysts aren't forecasting this not to happen till March time though.  We also have to bear in mind that the Republicans & Democrats still have to thrash out a Debt ceiling deal in February however which is always a bit of a pantomime, so they're not quite out of the woods just yet.

Taking a look at the charts, we've had a good bear run from the 50% Fib retracement level and are now hovering around the 0.9050/0.9100 support area.  This proved to be a relatively tough level to break back in July, only having done so twice in August, neither being sustained for a significant period of time.

The 20 day SMA has offered a good resistance/support level in the previously trending market, as well as the much stronger 100 day which is also sitting at the 0.9300 level which just so happens to be the head-and-shoulders neckline of the previous chart pattern, both of which can be used effectively in your trading strategies.  This definitely still feels like a market where the rallies are good opportunities to short the market.  A break below the 0.9050 level, the next downside target is 0.8850.

Charts sourced from ig.com