AUD/USD Short-Term Indecision into Long-Term Direction

2017-11-27 20:04:00

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Aussie rebound testing former support- Looking for signs of basing on a move towards 7500
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AUD/USD Daily Chart

Technical Outlook: Aussie broke below the November opening-range lows and key support at 7632 earlier in the month, keeping the short-bias in play. Prices registering a low at 7532 last week before rebounding back into former support, now resistance. The pair has continued to trade within this broad descending pitchfork formation extending off the yearly highs with the near-term risk lower while below the median-line / 200 day moving average at 7671/93. Critical support rests at 7476/99 where the 2016 trendline support converges on the 78.6% retracement of the May advance. A break / close below this level would be needed to invalidate the broader uptrend in AUD/USD.

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AUD/USD 240min Chart

Notes: A closer look at price action highlights interim resistance back at 7633 with our near-term bearish invalidation level steady at the 7672 confluence. Interim support rests at 7571 backed by the monthly lows at 7532 and the 7500 support zone – an area of interest for exhaustion / long entries.

Bottom line: I’ll favor fading strength while below 7672 with either a move lower into 7500 OR a breach above 7672 needed to shift the focus back to the long-side.

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A summary of IG Client Sentiment shows traders are net-long AUDUSD- the ratio stands at +1.33 (57.1% of traders are long) –weak bearishreading
Retail has remained net-long since Nov 10th, price has moved 0.9% lower since then
Long positions are 1.1% higher than yesterday and 0.3% higher from last week
Short positions are 1.5% lower than yesterday and 4.6% higher from last week
We typically take a contrarian view to crowd sentiment and the fact traders are net-long suggests AUDUSD prices may continue to fall. However, positioning is more net-long than yesterday but less net-long from last week and the combination of current sentiment and recent changes gives us a further mixed AUDUSD trading bias.

See how shifts in AUD/USD retail positioning are impacting trend- Click here to learn more about sentiment!

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