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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Here are the key levels that matter on the weekly charts for the S&P 500, AUD/USD and AUD/JPY heading into the open of the month / quarter. Review this week’s Strategy Webinar for an in-depth breakdown of these setups and more.

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SPX500 Weekly Price Chart

SPX500 Price Chart - Weekly Timeframe

Notes: Simplicity is key- Last month we highlighted key support in the S&P 500 at the, “confluence of the 61.8% extension and the 200-day moving average around 2586/90.” A sliding parallel (red) of the dominant slope (blue) extending off the November 2016 lows also converges on this region and further highlights the technical significance of this support zone. Price is testing this threshold into the monthly open- look for a decisive reaction early in the month.

Bottom Line: A break / weekly closebelow this critical support confluence risks substantial losses for the index with such a scenario targeting the 52-week moving average around ~2550s backed by confluence Fibonacci support at 2453/68. Interim resistance stands with former pitchfork support ~2660 with a breach above the yearly high-day close at 2754 needed to alleviate further downside pressure (bearish invalidation).

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AUD/USD Weekly Price Chart

AUD/USD Price Chart - Weekly Timeframe

Notes: The Australian Dollar has approached a long-term support confluence we’ve been tracking since the start of the year at 7612/37. This region represents a critical inflection point for price and IF broken would risk a substantial sell-off in the Aussie. That said, we’re looking for signs of support this week with a breach above confluence resistance at 7750 needed to alleviate further downside pressure.

Bottom line: The immediate short-bias is at risk heading into 7612/37 and from a trading standpoint I’ll be looking for evidence of a near-term low in this range. A break lower would keep the focus on subsequent support targets at 7481 and the 61.8% retracement of the 2016 advance at 7327.

AUD/USD IG Client Sentiment

AUD/USD Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-long AUDUSD- the ratio stands at +1.36 (57.6% of traders are long) –weak bearishreading
  • Retail has remained net-long since Mar 22nd; price has moved 1.3% lower since then
  • Long positions are 6.4% higher than yesterday and 24.2% higher from last week
  • Short positions are 4.9% higher than yesterday and 3.7% lower 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUDUSD-bearish contrarian trading bias from a sentiment standpoint

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AUD/JPY Weekly Price Chart

AUD/JPY Price Chart - Weekly Timeframe

Notes: AUD/JPY broke to multi-year lows last month with the decline taking price through a key pivot zone at 81.58. The immediate risk remains lower while below this threshold with subsequent support targets eyed at 79.45 and the median-line confluence around 78.50s. Note that AUDJPY made a new multi-year low while AUDUSD has not; a disparity that often manifests itself at larger turns in price- keep a close eye here.

Bottom line: AUD/JPY remains at risk for further losses while below the median-line of the broad descending pitchfork formation extending off the early 2017 highs. A breach above this level would threaten a larger advance / recovery targeting the 2017 open at 84.25. From a trading standpoint, we’ll favor fading strength near-term while below the 82-handle.

Previous Weekly Technical Perspectives

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

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