Talking Points
- AUD/USD trade remains constructive but beware of exhaustion
- Updated targets & invalidation levels
- Looking for more trade ideas? Review DailyFX’s 2017 Trading Guides. Join Michael for Live Weekly Trading Webinars on Mondays at 13:30GMT (8:30ET)
AUD/USD 120min
Technical Outlook: Aussie has been holding a well-defined range between just above the January highs at 7609 into 7699. Note that the pair has continued to respect this slope extending off the December/January lows and heading into tonight’s Australia employment report, I’ll favor the long-side while above the weekly lows with broader bullish invalidation at 7570- a region defined by the 23.6 % retracement, the lower parallel & would necessitate a break back below the monthly open.
A breach higher still faces a series of resistance targets at 7735, 7756 & the November highs a 7778. Added caution is warranted heading into tonight’s Australia employment report with the release likely to fuel volatile in the Aussie crosses. Keep in mind markets are anticipating a gain of 10K jobs for the month of January with unemployment & labor force participation widely expected to hold at 5.8% & 64.7% respectively. That said, the risk is to the downside in price on a miss in the data.
From a trading standpoint, I would be looking to fade weakness while above the slope support we tagged last night with a stretch into the topside targets on the data release likely to offer near-term opportunities on the short-side.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are short AUDUSD- the ratio stands at -1.65 (38% of traders are long)- bullish reading
- Long positions are 0.1% higher than yesterday but 9.3% below levels seen last week
- Short positions are 9.9% lower than yesterday but 7.7% above levels seen last week
- Open interest is 6.4% lower than yesterday and 1.3% below its monthly average
- While the current SSI profile continues to point higher, it’s worth noting that the continued narrowing in the ratio from recent extremes does leave the long-bias vulnerable near-term while within this price range.
Relevant Data Releases
Looking for trade ideas? Review DailyFX’s 2017 1Q Projections
Other Setups in Play:
- USD/JPY Clears Monthly Range, Trendline Resistance Ahead of U.S. CPI
- EUR/GBP Approaching Key Support Targets – 8400 in Focus Ahead UK CPI
- Weekly Strategy Webinar: USD Rebound Hinges on Yellen Testimony
- Silver Eyes Key Resistance- Weakness to Be Viewed as Opportunity
- EUR/USD Eyes 1.0580 Support Ahead of 4Q GDP
---Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list.
