AUD/USD Runs to Highs as Dollar Sell-off Deepens

2017-06-29 18:20:00

Michael Boutros,

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Talking Points

Aussie rally pushes to fresh monthly highs- topside targets in view
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AUD/USD Daily

Technical Outlook:The Aussie has continued to trade within the confines of an ascending pitchfork formation- although it doesn’t look that compelling here, intraday price action does shows more evidence for the use of this slope. That said, price is testing the 161.8% extension of the advance off the May lows at 7676/80.

A breach higher from here targets a longer-term trendline resistance extending off the 2016 highs (red), currently around ~7705 (note that the 2017 high-day close comes in at 7690). This threshold is backed closely by a critical resistance zone at 7735/56 where the 2016 high-day close converges on the upper parallel and the 88.6% retracement. Both of these regions represent areas of interest for near-term exhaustion / short-entries.

AUD/USD 240min

Notes: A closer look at the 240min chart highlights initial support at 7650 / the median-line with the immediate focus higher while above this region, for now. Key support and broader bullish invalidation rests lower at 7560/67.

Remember, we’re heading into the close of the week, month & quarter- not our favored intraday trading environment. That said, added caution is warranted heading into tomorrow’s data releases with U.S. Personal Consumption Expenditure (PCE) and income / spending figures on tap.

A summary of IG Client Sentiment shows traders are net-short AUDUSD- the ratio stands at -2.12 (32.1% of traders are long) - bullish reading
Retail has been net-long since June 4th; price has moved 2.9% higher since then
Percentage of traders net-long is now its lowest since Jun 20 when AUDUSD traded near 75802
Long positions are 26.1% lower than yesterday and 26.6% lower from last week
Short positions are 9.4% higher than yesterday and 11.0% higher from last week
We typically take a contrarian view to crowd sentiment, keeping the focus higher for the Aussie. That said, prices are approaching key resistance targets as sentiment is pressing fresh monthly extremes and does leave the long-bias vulnerable heading into the close of the month.

See how shifts in AUDUSD retail positioning are effecting market trends- Click here to learn more!

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Relevant Data Releases