Weekly Technical Perspective on the Australian Dollar (AUD/USD)

2018-07-05 17:00:00

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AUD/USD Weekly Price Chart
AUD/USD IG Client Positioning
Relevant AUD/USD Data Releases
Previous Weekly Technical Perspectives

AUD/USD testing downtrend support- Short-bias vulnerable while above 7327
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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 targets & invalidation levels that matter on the weekly chart for the Australian Dollarvs US Dollar (AUD/USD). Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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AUD/USD Weekly Price Chart

Notes: In last month’s Weekly Technical Perspective on the Australian Dollar, we were questioning whether AUD/USD had put in a high after price pulled back from confluence resistance. Our bottom line noted, “The potential for a larger recovery remains while above the yearly low-week close at 7541 but we’re generally on the lookout for topside exhaustion on this stretch higher.”

Price turned sharply lower that week with Aussie taking out targets into key support at 7327- a level defined by the 61.8% retracement of the 2016 advance and the May 2017 swing lows. Note that the median-line of the descending pitchfork formation has continued to govern the lows on a weekly close basis and highlights the risk to the short-side here.

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Bottom line: Aussie is testing downtrend support here and leaves the broader AUD/USD short-bias vulnerable while above 7327. We’ll be looking for further evidence that an exhaustion low is in place- I’ll publish a scalp updated once we get some structure in near-term price action but the intraday trade levels are largely unchanged from my previous Aussie technical outlook.

For now, look for a weekly close above this level with our near-term focus higher while above this week’s low. The monthly opening-range is taking shape just below initial resistance at the May low / July open at 7411/12 with a breach there targeting the December lows / 50% retracement at 7481-7500. A downside break of this key level shifts the focus lower again with such a scenario targeting slope support / 7145/60. Keep in mind we get the release of U.S. Non-Farm Payrolls (NFP) tomorrow morning with the event likely to fuel increased volatility in the USD crosses.

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AUD/USD IG Client Positioning

A summary of IG Client Sentiment shows traders are net-long AUD/USD- the ratio stands at +1.84 (64.8% of traders are long) – bearish reading
Traders have remained net-long since June 5th; price has moved 2.2% lower since then
Long positions are 2.3% higher than yesterday and 3.7% lower from last week
Short positions are3.7% higher than yesterday and 14.1% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current AUD/USD price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!