The Australian Dollar is up more than 2.5% against the US Dollar since the monthly lows registered last week with the price breakout now approaching the major resistance targets. These are the updated targets and invalidation levels that matter on the Aussie price charts (AUD/USD). Review this week’s Strategy Webinar for an in-depth breakdown of this Aussie setup and more.
Aussie Price Chart – AUD/USD 120min
Notes: In my last Aussie Weekly Price Outlook we noted that a downside break below slope support / 6900, “would once again keep the 2016 low / low-week close into focus at 6827/55– look for a more significant reaction there IF reached.” Price registered a low at 6832 last week before rebounding sharply with the rally trading within the confines of this near-term ascending channel formation.
The advance is now testing the January 3rd yearly low-day close at 7005. Note that the June opening-range high & the 2019 open stand just higher at 7022 and 7042 – we’re looking for near-term exhaustion off one of these levels. Interim support rests with the lower parallel – a downside break would expose subsequent objectives at the 61.8% retracement at 6950 and the June / weekly open at 6926/30 – losses should not surpass this support zone IF Aussie is indeed heading higher.
Bottom line: The Aussie breakout is approaching a series of major resistance targets at 7005/42 and the leave the immediate long-bias vulnerable heading into the close of June trade. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops. Be on the lookout for topside exhaustion on push into the monthly highs for the pullback. Ultimately, we’ll favor fading weakness while above the Monthly open targeting a test / breach of yearly open resistance. Keep in mind we have the RBA (Reserve Bank of Australia) interest rate decision and US NFPs (Non-Farm Payrolls) on tap into the first week of July trade.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Aussie Trader Sentiment (AUD/USD)
- A summary of IG Client Sentiment shows traders are net-long AUD/USD – the ratio stands at +1.21 (54.7% of traders are long) – weak bearish reading
- Traders have remained net-long since April 18th; price has moved 1.7% lower since then
- The percentage of traders net-long is now its lowest since April 12
- Long positions are 3.5% lower than yesterday and 21.5% lower from last week
- Short positions are 22.0% higher than yesterday and 79.4% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Aussie prices may continue to fall. Yet traders are less net-long than yesterday & compared with last week and the recent changes in sentiment warn that the current AUD/USD price trend may soon reverse higher despite the fact traders remain net-long.
See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!
Relevant Australia / US Data Releases
Active Trade Setups
– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex