AUDUSD Vulnerable to RBA - Technicals Remain Constructive Above 7495
- AUD/USD trading within ascending technical formation- ahead of RBA
- Updated targets & invalidation levels
Chart Created Using TradingView
Technical Outlook: AUDUSD has continued to trade within the confines of a well-defined ascending median-line formation off extending off last week’s lows with the pair rebounding off confluence support at 7549 in early New York trade. Despite expectations for an interest rate cut from the RBA, the focus remains higher in the Aussie – remember markets are already pricing in a 67% probability the central bank looks to ease tonight.
From a trading standpoint, heading into the release I would be looking to fade Aussie weakness into structural support. I’m holding a quarter of a long scalp off interim support at 7549 targeting 7571/75 with stops now at breakeven. With that said, the risk remains for a pullback on the RBA decision however, with a break lower targeting 7518 & key support / bullish invalidation at 7495 – both areas of interest for exhaustion / long-entries.
A breach above the weekly / monthly open at 7590 targets subsequent topside objectives at 7615 backed by 7644. Key resistance stands at 7677/87. 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.
Avoid the pitfalls of near-term trading strategies by steering clear of classic mistakes. Review these principles in the "Traits of SuccessfulTraders” series.
- A summary of the DailyFX Speculative Sentiment Index (SSI)shows traders are net short AUDUSD- the ratio stands at -1.07(48% of traders are long)-weak bullishreading
- Yesterday the ratio was -1.22. Long positions are 10.4% higher than yesterday and 11.1% below levels seen last week.
- Open interest is 3.0% higher than yesterday and 1.1% above its monthly average.
- SSI flipped to net short on Friday as the exchange rate rallied through the weekly opening range highs. Keep in mind that we’ve seen a slight pullback in short-exposure heading into tonight’s interest rate decision & leaves the risk for a drop lower before rallying to new highs
Help fine-tune you entries, click here to learn more about the DailyFX Grid Sight Index (GSI)
Relevant Data Releases This Week
Other Setups in Play:
- USDOLLAR Heavy on GDP- Monthly Opening Range to Hinge on NFP
- U.S. GDP Game Plan: EUR/USD Rebound Looks to Data for Fuel
- EUR/JPY Primed for BoJ - Levels to Know
- AUD/NZD Correction Underway Ahead of RBA- Look to Buy the Dip
Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016
---Written by Michael Boutros, Currency Strategist with DailyFX
Join Michael for Live Scalping Webinars on Mondays on DailyFX and Tuesday, Wednesday & Thursday’s on SB Trade Desk at 12:30 GMT (8:30ET)
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.