Talking Points

  • AUDUSD rally testing multi-month resistance range- Immediate long-bias at risk below
  • 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)

AUDUSD Daily

AUD/USD Daily Chart

Technical Outlook:AUDUSD is probing a key resistance range we’ve been tracking for the past few months at 7735/56- this region is defined by basic trendline resistance, the 88.6% retracement of the April decline & the 2016 high-day close and has continued to cap rallies in Aussie since August. The focus is on this key range heading into the close of the month with a close above needed to mark a more significant breakout opportunity in the pair. That said, the immediate advance remains at risk while below this threshold with interim support seen at the monthly open 7656.

AUDUSD 120min

AUD/USD 120min Chart

Notes:A look at the intraday chart highlights a near-term slope originating off the monthly lows with the weekly opening range now taking shape just below the 7735/56 resistance zone- look for the break with a move sub-7651/56 needed to mark a more meaningful correction in the pair. Such a scenario targets subsequent objectives at 7620 & 7591. Broader bullish invalidation rests at 7542/47 (3/3 swing low / 200-day moving average).

A breach topside breach still has to contend with the November high at 7778- but beyond that, it should be smooth sailing to 7835. From a trading standpoint, I’ll be looking for exhaustion around these levels with a deeper pullback to offer more favorable long opportunities into structural support – the first of which would be the monthly open. Keep in mind seasonal tendencies favor USD weakness (i.e. AUDUSD strength) heading into the start of April trade.

A quarter of the daily average true range (ATR) yields profit targets of 17-22pips per scalp. Most of the event risk this week will come from the USD with the release of the February Durable Goods Orders on Friday highlighting the economic docket.

AUD/USD SSI
  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-short AUDUSD- the ratio stands at -2.28 (30.5% of traders are long)- bullish reading
  • Traders have been net-short since January 9th when Aussie was trading near 7182- Since then, the pair has rallied 7.7%
  • Long positions are 4.5% higher than yesterday and 9.9% lower from last week
  • Short positions are 5.2% higher than yesterday and 19.0% higher from last week
  • While SSI continues to broadly point higher, it’s worth noting that the recent build in open interest & recovery in SSI off the monthly lows suggest the immediate bullish bias is at risk- especially as prices press key resistance.

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Relevant Data Releases

AUD/USD Revisits Multi-Month Resistance

Other Setups in Play:

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list.