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AUD/USD Remains Constructive Above 7511 Heading into RBA

AUD/USD Remains Constructive Above 7511 Heading into RBA

Talking Points

  • AUDUSD vulnerable heading into RBA- Shorts at risk above 7511
  • RBA expected to stand pat on monetary policy
  • Updated targets & invalidation levels

AUD/USD 120min

AUD/USD 120min Chart

Chart Created Using TradingView

Technical Outlook: Friday’s sell-off rebounded off confluence support at 7554/60 with the exchange rate holding below the 50-line of the descending pitchfork formation extending off the late September & October highs. The focus is on this range heading into the RBA interest rate decision tonight and from a trading standpoint, Aussie looks like it’s trying to make a low and I’ll favor fading weakness in the pair with 7554 & 7511 areas of interest for near-term exhaustion / long-entries.

A topside breach above 7625 targets the monthly open / 61.8% retracement at 7651 backed closely by confluence resistance into 7676/80- A breach / close above this level is needed to validate a more prominent breakout targeting the 2016 high-day close at 7735 & 7756.

  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long AUDUSD- the ratio stands at +1.26 (56% of traders are long)- weak bearish reading
  • Long positions are 15.7% above levels seen last week while short positions are 9.4% lower over the same time period.
  • Open interest remains subdued at 0.9% below its monthly average
  • The current dynamic suggests that the near-term risk remains weighted to the downside and we’ll be looking for a build in short-positioning to suggest the pullback may be running its course. From a trading standpoint, I would be looking to fade a move lower into structural support.

Help fine-tune you entries, click here to learn more about the DailyFX Grid Sight Index (GSI)

Relevant Data Releases This Week

AUD/USD Economic Docket

Other Setups in Play:

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---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.