Talking Points
- AUD/USD constructive above monthly open ahead of key data
- Updated targets & invalidation levels
AUDUSD 30min
Chart Created Using TradingView
Technical Outlook: Aussie is coming off confluence support at the monthly open, trendline support extending off the May low and the 61.8% retracement of the post-Brexit advance at 7446/50. A breach above the initial weekly opening-range shifts the focus higher while above 7490.
A near-term slope has been identified off the lows and further highlighting near-term support with our bullish invalidation level set to the monthly open. A breach higher targets the monthly high-day reversal close / 61.8% retracement at 7571/75 backed closely by 7587 & the upper median-line parallel. Subsequent topside objectives are eyed at 7621 & 7644.
From a trading standpoint, heading into tonight’s Australia’s Consumer Price Index (CPI), I would be looking to fade Aussie weakness into structural support. Keep in mind that core CPI (Trimmed Mean) is expected to fall to 1.5%, which woudl be its slowest pace of growth on since records began in 1983. For the complete setup and to continue tracking this trade and more throughout the week- Subscribe to SB Trade Deskand take advantage of the DailyFX New Subscriber Discount.
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- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long AUDUSD- the ratio stands at +1.03(51% of traders are long)-weak bearishreading
- Yesterday the ratio was +1.12. Long positions are 6.0% lower than yesterday and 8.0% below levels seen last week
- Open interest is 2.2% lower than yesterday and 1.8% above its monthly average.
- SSI flipped to net positive on July 19th and although SSI keeps the broader outlook weighted to the short-side, the pair is coming off interim support as long exposure is waning, suggesting that the immediate short-bias remains at risk heading into tonight’s inflation report. A flip to net-short alongside a breach above near-term resistance would suggest a larger advance is underway.
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Relevant Data Releases This Week
Other Setups in Play:
- Post-Brexit NZDUSD Support Vulnerable to Weak NZ Trade Balance
- Webinar: USDOLLAR within Striking Distance of 2016 Open Ahead of FOMC
- USD/CAD Eyes Key Resistance Hurdle Ahead of Canada Retail Sales/CPI
- AUD/JPY- View Weakness as an Opportunity
Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016
---Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list
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