Chinese Data and a Look at AUD/USD

October 19, 2016

The attention of the Forex trading world this morning turns to China, and the key set of data due to be released.

The tier one data that Forex markets will be most affected by in terms of short term volatility will be the GDP number and Industrial Production releases.

CNY GDP q/y: 6.7% expected, and 6.7% previous.
CNY Industrial Production y/y: 6.4% expected, and 6.3% previous.

GDP is expected to remain steady at 6.7% for the three month period through to September, but would have expanded from twelve months earlier. If the number comes in as expected, this keeps things running at a relatively steady pace within the government’s full year target price.

A good place to be if you’re a planned economy.

Speaking to Reuters earlier in the month, Chinese Premier Li has said that the economy has actually performed better than expected this quarter. Again, something which bodes well for today’s release.

“China’s economy in the third quarter not only extended growth momentum in the first half but showed many positive changes.”

We’ve been looking at the same AUD/USD chart levels on both the blog and @VantageFX Twitter account for what seems like months now, so I just wanted to throw a bit of a spanner in the works and make you think about the placement of trend lines.

First of all, looking at our standard AUD/USD chart, we have price breaking out of resistance:

AUD/USD Daily:
161017_audusd_daily
Click on chart to see a larger view.

Here I’ve gone the lines that stand out to me the most. I see drawing trend lines much more as an art than a science because as everyone sees things differently, I just try to draw the most obvious of obvious ways to connect the dots.

As you can see on your live MT4 chart, price has broken out of resistance as we’ve been expecting…. or has it?

AUD/USD Daily:
au1
Click on chart to see a larger view.

Just look at all those possibilities. Break out, fake out, resistance holding, ahh?!

Trend lines are always going to be best used as zones rather than hard levels. Depending on how price reacts to the trend line zone, you will always have a multitude of clear horizontal levels across all time frames to manage your day trades around.

Be an intelligent trader and just don’t close your eyes and buy/sell trend lines.

As for today’s trading, I’m still expecting some sort of technical follow through if we can break out of this resistance level. It’s been a long time coming and today’s data could be the kick we need to see some follow through.

Have a great day!

———

On the Calendar Wednesday
CNY GDP q/y
CNY Industrial Production y/y

GBP Average Earnings Index 3m/y
GBP Claimant Count Change

USD Building Permits
CAD BOC Monetary Policy Report
CAD BOC Rate Statement
CAD Overnight Rate
USD Crude Oil Inventories
CAD BOC Press Conference

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Dane Williams – @VantageFX

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