Weekly AUDUSD Technical Outlook: Be Wary of the Bounce
AUDUSD Technical Outlook:
- Aussie bounce could continue but watch for stalling momentum
- Overall trend isn’t supportive for a sustained rally
For the intermediate-term fundamental and technical outlook on major asset classes, check out the Q3 Forecasts.
Aussie bounce could continue but watch for stalling momentum
AUDUSD is rising hard off the recent low, stringing together multiple positive days. It’s the strongest bounce since June, but like the first month of summer the initial push higher may prove to be short-lived. The key will be how momentum continues in the days ahead.
There is an immediate threat to the rally via the June low, and to a lesser degree the May low. A reversal in the vicinity of 6840/75 could present traders with an opportunity to short for a drop back towards the recent lows under 6700. Stops set above any swing-high that develops once a turn down begins.
The decline may not be brisk, though, and if weakness doesn’t bring sellers in in earnest, conditions could turn choppy as price undergoes a corrective period during the days/weeks ahead. Longer-term the trend remains firmly down; it will take a good amount of work for AUD to turn the outlook favorable in any meaningful way.
All-in-all, this coming week could bring a short trade into play, while would-be longs may be best served waiting to see if the rally can hold on a retracement.
Check out the IG Client Sentiment page to find out how changes in retail positioning could signal the next price move in major markets.
AUDUSD Daily Chart (trend remains down, testing prior lows)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.