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AUDUSD Vulnerable to RBA - Technicals Remain Constructive Above 7495

AUDUSD Vulnerable to RBA - Technicals Remain Constructive Above 7495

Talking Points

  • AUD/USD trading within ascending technical formation- ahead of RBA
  • Updated targets & invalidation levels

AUDUSD 60min

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.

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  • 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:

Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016

---Written by Michael Boutros, Currency Strategist with DailyFX

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