 Good morning and welcome to the chart of the week video with me, David Madden. Today's date is Friday the 5th of February 2021 and the time has just gone at 9.22 GMT. This week's chart of the week is the Australian dollar versus the US dollar or some call it the Aussie dollar. The Aussie dollar has been in a strong overtrend the last number of months. In fact, the beginning of the year hit its highest level in about two and a half years. I was well over a two-year high that was achieved and since then we've seen a bit of a pullback which isn't really a surprise if you rack up a multi-year high, it's not really a shock to see a bit of a move to the downside. What we can see here is we've had the lower low, the lower high, and the lower low. We're currently just hovering above that blue line there, the fifth of the moving average which comes to the play and at zero spot 7608. We're holding above that metric. If you take a look at the MACD indicator, MACD histogram, we can see that as the market was moving lower there was a steady increase in positive momentum but we have been seeing a decline in the negative momentum and that's coupled with a sideways move in the currency pair. So it seems that the bearers are running out of steam and this video I want to talk about are we going to see a continuation in the recent negative move and it's going to be a wider correction in the currency pair or is this going to be a drift back lower before a resumption of the wider upward trend that's been in play? So if you do look to move on lower from here, we could be heading back down toward this yellow line here the water under the moving average that comes in the play in at zero spot 7394 and if you have a pretty size of break below that, that could take us back down towards this red line here the two really moving average. The metric we haven't tested for a long time on this particular currency pair but if you are going to be trading the Australian dollar versus the US dollar it is worth noting what has gone on in the actual US dollar itself because some of the gains that have been racked off particularly in late 2020 have been as a result of the weakness in the US dollar. So if you take a look at what the US dollar is doing here at CMC markets we offer forex indices under products you can click on forex indices we can click on this one here the CMC GBP so CMC USD index we can see that we've had a recent turnaround in the US dollar there's a negative trend all the way into the very beginning of this year we've been recovering ever since so in my opinion an interesting point in the dollar but also in the Australian dollar in that if we're going to see a wider correction in the US dollar that's likely to put more pressure on the Australian dollar versus the US dollar but it could be just a case that the US dollar is having a rebound recouping some of the losses but only to turn lower on itself yet again and recast recent lows so if we do have a break below the January low in the US dollar and the CMC US dollar index or if you take out the December high these could be significant turning points for the Australian dollar it's turning our attention back to the Aussie dollar chart you can see here that it's the markets come off quite the decline in the Australian dollar versus the US dollar hasn't actually been that much especially compared to how much the euro has suffered which is a sign of the wealth of strength of the Australian dollar versus that of the euro it is worth noting that there's a quite a size to move between late November and early November and early January so what we could do is take a look at the potential Fibonacci retracement levels that can be found on a platform here or the draw tools under the draw tool Fibonacci here and if you draw it here, oh my apologies I'll be careful with this one if you draw it here at the base of the rally here just below zero around 0.70 bringing up here to the highs of 2021 we can see here we can see here that there's been quite a significant move between the lows of early November and the highs of early January so if you keep an eye out for potential areas of resistance for those of you who don't know you don't really follow the Fibonacci retracement indicator what essentially it does is it talks about how after you have a significant move it's not uncommon to see a retracement or a correction in the opposite direction so if you take a look at the very significant levels take a look at this single move here if we do see a retracement of 23.6% which we have seen here at this line here we're pretty much on that metric right now at 0.7611 if we see further declines we could head back towards the 38.2 retracement in at 0.7492 a further move below that could take us back down towards the 50% retracement in at 0.7396 now for me this is a potential area of big support because we did see some support in that area in early December the 50% retracement also coincides roughly speaking with the other line here the 100 day moving average so when the potential levels of potential importance overlap the 50 day retracement or the 50 day moving average of the Fibonacci retracement and the 100 day moving average that makes it more likely that will be of significance so if we do see a move to the downside in the Aussie dollar, US dollar which could be brought about by a break higher in the CMC USD index keep an eye out for these levels to the downside now taking a look at the upside if we do manage to move higher from here we could be looking at retesting up towards 0.78 and if we go beyond that we could then be heading up towards 0.80 we could have the next big move to the upside on the Australian dollar versus the US dollar now if you are going to be trading Aussie dollar, US dollar today keep in mind that today is non-farm payrolls so that's probably likely to inject a lot of volatility in the markets that announcement is coming out at 1330 GMT under this tab here on the market calendar we can find out what the results we posted here up on the announcement we can see here in relation to the non-farm payrolls what we're expecting is an increase of 50,000 jobs which would be a sharp rebound from the 140,000 jobs that were lost in December we're also expecting the unemployment rate to hold steady at 6.7% so keep in mind about the jobs data that's coming out at 1330 GMT today likely inject a lot of volatility that's all from this video thank you for listening have a great trading day and have a nice weekend