AUD/USD Remains Constructive Above 7511 Heading into RBA
- AUDUSD vulnerable heading into RBA- Shorts at risk above 7511
- RBA expected to stand pat on monetary policy
- Updated targets & invalidation levels
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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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.