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Here's an update on a few of the setups we’ve been tracking this week. For a complete breakdown of these setups and more, review this week’s Strategy Webinar.
AUDUSD: Is a Low in Place?
AUD/USD120min Price Chart
We’ve been tracking key support barriers at 7636/45 and 7612 for the past few months and last week we highlighted a near-term descending channel into this zone. A breach above shifts the focus higher with a newly-identified pitchfork offering guidance on this advance. Look for interim support at the median-line with our focus higher while above the April open at 7686. A breach / close above 7780/87 would be needed to suggest a more significant low is in place with such a scenario targeting the 200-day moving average / 61.8% retracement at 7810/12.
AUD/USD IG Client Positioning
- A summary of IG Client Sentimentshows traders are net-long AUDUSD- the ratio stands at +1.07 (50.7% of traders are long) – extremely weak bearishreading
- Traders have remained net-long since Mar 22nd; price has moved 0.9% higher since then
- The percentage of traders net-long is now its lowest since Mar 26thwhen AUDUSD traded near 0.77451
- Long positions are 18.7% lower than yesterday and 3.5% lower from last week
- Short positions are 32.3% higher than yesterday and 2.4% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD 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 AUDUSD price trend may soon reverse higher despite the fact traders remain net-long.
GBP/JPY Testing BIG Resistance
Price is testing a key resistance confluence at 151.84-152.17 and our focus is on a near-term inflection here. The immediate rally is at risk below this threshold and we’re on the lookout for some exhaustion. Ultimately a pullback would offer more favorable long-entries with our broader focus higher while above the monthly open. I highlighted this setup including the near-term trading levels in today’s GBP/JPY Scalp Report.
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USD/CAD in Free-Fall
USD/CAD Daily Price Chart
USD/CAD has plummeted nearly 4% off the March highs after reversing sharply off key confluence resistance at 1.3103/32. The decline has now taken out most of our support targets with the next big zone at 1.2579/82 where the 61.8% retracement of the 2018 range converges on the yearly open- look for a reaction there. Weakness surpassing this level keeps the short-bias in play targeting the 50-line around ~1.2540s and the measured head & shoulders target at 1.2482.
Initial resistance stands at 1.2633 & 1.2686 (both levels of interest for exhaustion / short-entries) with our broader bearish invalidation level now lowered to 1.2803. Intraday targets remain unchanged from last week’s USD/CAD scalp report.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
-Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org