AUD/USD: RBA Game Plan & Levels to Know

2017-04-03 17:00:00 Michael Boutros, Strategist

Talking Points

AUD/USD opening range in focus ahead of RBA- risk lower sub-7650
Updated targets & invalidation levels
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AUDUSD 120min

Technical Outlook:Aussie has been trading within the confines of a descending channel formation extending off the March highs and heading into tonight’s Reserve Bank of Australia (RBA) interest rate decision the broader focus remains lower while within this formation. From a trading standpoint, ultimately I’m looking for a new low to fade early in the week.

Initial resistance stands at 7622 with bearish invalidation at 7649. A breach above this level would shift the focus higher for the Aussie targeting 7687. Interim support rests with the 61.8% retracement at 7590 with a break lower targeting confluence support at 7540/47(area of interest for exhaustion / long-entries)- a break below this threshold would risk substantial losses for the pair with such a scenario eyeing subsequent support targets at 7490 & 7450.

A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-short AUDUSD- the ratio stands at -1.55 (39.2% of traders are long)- weak bullish reading
Traders have been net-short since January 9th when Aussie was trading near 7189- Since then, the pair has rallied 6.6% higher
Long positions are 17.9% higher than yesterday and 31.6% higher from last week
Short positions are 4.5% higher than yesterday but 3.9% lower from last week
While SSI continues to point higher, it’s worth noting that the recent build in long positioning continues to highlight the risk for further losses in the near-term – look for post-RBA price reaction / a break of the weekly opening range to offer further guidance.