Talking Points
- AUD/USD targeting resistance ahead of NFPS
- Updated targets & invalidation levels
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Technical Outlook: Aussie failed to break through the lower median-line parallel last month with the subsequent rebound breaking through confluence resistance today at 7282. This level is defined by the 2016 open and the 50-line of the operative descending pitchfork formation. Note that daily RSI broke above a multi-month resistance trigger yesterday and keeps our focus weighted to the topside while above this threshold. Resistance is now eyed at 7397 where the 38.2% retracement converges on the median-line (area of interest for exhaustion / short-entries).
AUD/USD 120min
Notes: A closer look at price action highlights a breach & retest of the 7282 resistance zone with immediate topside resistance objectives eyed at 7370 & 7397. A breach above this mark would be needed to suggest a larger reversal is underway in the pair.
Bullish invalidation rests with the weekly / monthly open at 7200- a break below this level would shift the focus back to the short-side with such a scenario targeting 7144/60 & the 100% extension of the November decline at 7088. A quarter of the daily average true range (ATR) yields profit targets of 17-20pips per scalp. Added caution is warranted heading into tomorrow’s highly anticipated U.S. Non-Farm Payrolls report with the release likely to fuel added volatility in the dollar crosses. Follow the real-time news feed for live updates during the release.
AUDUSD Speculative Sentiment Index (Daily Chart)
A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are long AUD/USD- the ratio stands at +1.46. While the current SSI profile remains bearish, it’s important to note that the pullback in long positioning from the November extreme of 2.55 has been accompanied by a broader turn in the exchange rate and a flip to net-short in the coming days could further validate this near-term reversal play. That said, I’ll be looking for a continued build in short positioning to suggest a more significant low may be in place.
Relevant Data Releases
Looking for trade ideas? Review DailyFX’s 2016 4Q Projections
Other Setups in Play:
- NZD/USD at Key Inflection Point- Strength to be Sold Sub-7075
- AUD/NZD Responds to Multi-Year Slope- Short Bias at risk above 1.03
- Gold Weakness to Subside With Fed on Hold in First-Half of 2017
- Japanese Yen Poised to Fall Further for Two Key Reasons
- Gold Tumbles as FOMC Stokes Rate Expectations- Price at Key Support
---Written by Michael Boutros, Currency Strategist with DailyFX
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