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

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.

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Relevant Data Releases This Week

Other Setups in Play:

• Webinar: Key Trade Setups For November- Central Banks, NFP on Tap
• NZD/USD at Risk for Further Losses Heading into U.S. 3Q GDP
• Oil Price Sell-off to Gain Traction on a Break Below 48.80
• AUD/USD Rebound Looks to 3Q Australia CPI for Fuel
• EUR/CAD Rebound or Reversal? Line-in-the-Sand at 1.4600

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

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