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Near-term Trade Setups in USD/CAD and AUD/USD

Near-term Trade Setups in USD/CAD and AUD/USD

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USD/CAD Daily Price Chart

USD/CAD Daily Price Chart

In last week’s USD/CAD Price Outlook we highlighted that the rally was, “vulnerable near-term while below 1.3685. From a trading standpoint, I’ll favor fading weakness while below this region targeting a move towards the lower parallel.” The subsequent breakdown has taken price below the October parallel and a close at these levels would keep the focus lower sub-1.3435.

Initial support rests at 1.3290 backed by the 61.8% line of the ascending pitchfork (currently ~1.3260s) and the 50% retracement at 1.3224- Look for a larger reaction there if reached. Review this week’s Strategy Webinar for an in-depth breakdown of this USD/CAD trade setup and more.

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

AUD/USD Daily Price Chart

AUD/USD Daily Price Chart

Aussie posted an outside weekly reversal off basic channel support last week on building momentum divergence. The move keeps the focus higher for now while above the low-day close at 7005. Initial resistance stands at 7146 backed by the 100-day moving average and 7255/75- a breach / close above this level is needed to suggest a more significant low may have been registered last week. For now, looking for a decent set-back to offer favorable entries. I’ll publish an updated AUD/USD Technical Outlook once we get further clarity on near-term price action.

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AUD/USD Trader Sentiment

AUD/USD Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.59 (61.4% of traders are long) – bearishreading
  • Traders have remained net-long since December 4th; price has moved 2.4% lower since then
  • Long positions are9.7% higher than yesterday and 24.5% lower from last week
  • Short positions are 21.0% higher than yesterday and 60.7% 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 & 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.

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-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex

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