AUD/USD Indicating Bearishness after Forming a BEOB Pattern Last Friday
United States – Pending Home Sales
Today, at GMT 3:00 p.m. the National Association of Realtors will release the month-over-month Pending Home Sales figure, which measures the change in the number of homes under contract to be sold over the past month. However, this figure usually excludes the sale of any newly constructed homes.
As the sale of a home has a wide ranging positive effect in the local economy, binary options investors consider the pending home sales figure to be an important leading indicator of the US economy.
In January, the pending home sales (m/m) in the United States increased by 0.1% and the forecast for February is currently set at an increase of only 0.6%.
Australia – Building Approvals
On Tuesday, at GMT 12:30 a.m., the Australian Bureau of Statistics will release the national month-over-month building approvals figure, which measures the changes in the number of approvals of new buildings.
Since a build permit indicates new construction work, it suggests that there would be additional positive economic activities. For example, new jobs would be created for construction workers. Therefore, binary options traders consider this data regarding new building approvals to be a leading indicator of the overall economic health of the country.
Last month, the building approvals figure went up by 9.2% and the forecast for this month is currently set at a decrease of 2.9%.
Trade Recommendation for the AUD/USD
Since January 15, the AUD/USD price has been gradually gaining bullish momentum and formed a well-respected uptrend line in the process. However, last week, the AUD/USD price found strong resistance around the 0.7250 level. After several failed attempt to close above this resistance, the AUD/USD bulls finally gave up on Friday and the pair formed a bearish outside bar (BEOB).
As the AUD/USD price has already penetrated the low of this BEOB bar, there is a good probability that we will see further bearish movement in the market this week. However, to do that, the AUD/USD needs to close below the uptrend line first.
Also, as the forecast for the Australian building approval is set to decline this month, the fundamental outlook for the AUD/USD would remain bearish as well.
Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the GBP/AUD with their binary options brokers once the price closes below the support around the 0.7080 level.
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