The Australian Dollar is up more than 2.6% against the US Dollar from the monthly lows on the back of a five-day advance with Aussie now approaching initial resistance targets. These are the updated targets and invalidation levels that matter on the AUD/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this Aussie price setup and more.
Australian Dollar Price Chart – AUD/USD Daily
Technical Outlook: In my most recent Australian Dollar Price Outlook our bottom line noted that Aussie had turned off slope support, favoring, “fading weakness while above this threshold targeting 6827/55.” Price rallied into this level on Friday with AUD/USD testing longer-term slope resistance early in the week. Initial daily support rests at 6827 backed by the 68-handle- broader bullish invalidation now raised to the monthly low-day close at 6760. A topside breach from here exposes subsequent resistance objectives at 6910 and the 61.8% retracement at 6927.
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Australian Dollar Price Chart – AUD/USD 240min
Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of an ascending pitchfork formation extending off the late-August / September lows with price trading just above the median-line mid-day in New York. Looking for initial support at 6827/32 backed by 6803 – both levels of interest for possible downside exhaustion / long-entries IF reached. Weakness, on a close basis, beyond the figure would invalidate the current structure. Initial resistance now at the 50% retracement at 6880 with a breach there exposing topside targets at 6911 and 6924/27.Keep an eye on the weekly opening-range which has taken shape just above support – look for the break here for guidance.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: The Australian Dollar reversal is at risk here near-term. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops – look for an exhaustion low / support ahead of the lower parallels with our focus higher while within this formation.
Australian Dollar Trader Sentiment – AUD/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long AUD/USD – the ratio stands at +1.35 (57.5% of traders are long) – weak bearish reading
- Traders haveremained net-long since July 19th; price has moved 1.6% lower since then
- The percentage of traders net-long is now its lowest since July 17th
- Long positions are 4.6% lower than yesterday and 22.3% lower from last week
- Short positions are7.9% higher than yesterday and 34.6% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. 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!
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– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
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