FxWirePro: AUD/USD edges higher from multi-month lows with hammer formation, stay long on decisive break above 20-DMA

AUD/USD chart on Trading View used for analysis

• AUD/USD has shown a bounce off multi-month lows with a hammer formation.
   
• Weak China’s industrial profit growth in September likely to keep pressure on. 
   
• China’s industrial profit growth slowed again in September, to 4.1% y/y from 9.2% in August.
   
• The year-to-date fell to 14.7% from 16.2% y/y ytd in August – much weaker than the 22.8% for the same period last year.
   
• Technical studies on intraday charts are turning slightly bullish. Price action has broken above 1H 200-SMA.
   
• Break above stiff resistance at 20-DMA could take the pair higher to test 0.7162 (Upper BB).
   
• Major trend in the pair is bearish. Rejection at 20-DMA could see resumption of weakness.
   
• Focus now on Australia consumer price inflation (CPI) data for Q3, scheduled to be released on October 31 by 00:30GMT.

Support levels - 0.7081 (5-DMA), 0.7021 (Oct 26 low)

Resistance levels - 0.7098 (20-DMA), 0.7162 (upper BB)

Recommendation: Watch out for decisive break above 20-DMA to go long 

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.