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.
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- Written by Michael Boutros, Currency Strategist with DailyFX
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