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Near-term Setups in AUD/USD, NZD/USD and GBP/USD

Near-term Setups in AUD/USD, NZD/USD and GBP/USD

Michael Boutros, Strategist

Here's an update on the Australian Dollar, New Zealand Dollar and British Pound trade setups we’ve been tracking this week. For a complete breakdown of these trades and more, review this week’s Strategy Webinar.

New to Forex? Get started with our Beginners Trading Guide!

AUD/USD 240min Price Chart

AUDUSD Price Chart 240min

I highlighted this setup in this week’s AUD/USD Technical Outlook as price was probing fresh yearly lows. Out ‘bottom line’ noted that, “The downside is getting risky here near-term with upcoming support targets likely to offer some back-and-fill. From a trading standpoint, look to adjust any short exposure heading into these lower targets and be on the lookout for possible exhaustion.”

Price registered a low at 7345 on building RSI divergence yesterday with price now eyeing resistance at the May low-day close / weekly opening-range highs at 7456- a breach there is needed to keep the long-bias in play targeting the upper parallel / 7500/12. Key near-term support still 7327. Scaling out of longs here with stops at breakeven. Look for a pullback early next week for possible re-entry while above 7327.

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AUD/USD Trader Positioning

AUD/USD Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD- the ratio stands at +2.07 (67.4% of traders are long) – bearishreading
  • Traders have remained net-long since June 5th; price has moved 2.9% lower since then
  • Long positions are 4.9% lower than yesterday and 3.5% higher from last week
  • Short positions are 1.8% lower than yesterday and 3.0% 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. However, retail traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed AUDUSD trading bias from a sentiment standpoint.

See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!

NZD/USD 240min Price Chart

NZDUSD Price Chart 240min

Our bottom line in this week’s NZD/USD Technical Outlook noted that, “The near-term risk is for a larger recovery on this rebound with our focus higher while above 6850. Ultimately a larger recovery should offer more favorable short entries near structural resistance. From a trading standpoint, I’ll favor fading weakness while above today’s low targeting a move back towards former the underside of the May trendline.”

The price rally turned just one pip ahead of our second resistance target today! Note that 6915/20 and 6944 were both marked as areas of interest for possible exhaustion if reached and with the broader risk in the New Zealand Dollar still lower, it’s a good idea again here to scale out a portion of the longs and set stops to breakeven. Initial support now 6881 with near-term bullish invalidation now raised to 6860.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

GBP/USD Pending

The British Pound turned from a key long-term support confluence this week around 1.3164 with price posting and outside-day reversal on the heels of the BoE (Bank of England) interest rate decision. Price is now virtually unchanged on the week- watch the close - a weekly doji off support would further support the reversal play. We’ll be tracking for a near-term setup early next week but for now, I’ll want to see price hold above the 1.32-handle. Initial resistance on the topside 1.3330 (61.8% Fibonacci retracement of the recent decline).

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex or contact him at mboutros@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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