AUD/USD Technical Analysis: Passing on Long Trade Setup
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- AUD/USD Technical Strategy: Flat
- Support:0.9308, 0.9282, 0.9240
- Resistance: 0.9351, 0.9386, 0.9421
The Australian Dollar broke upward against its US namesake as expected, completing a Falling Wedge chart formation. A daily close above the 38.2% Fibonacci expansion at 0.9351 exposes the 50% level at 0.9386. Alternatively, a turn below the 23.6% Fib at 0.9308 opens the door for a challenge of the 14.6% level at 0.9282.
We will tactically opt to stand aside for now. While entering long is tempting from a technical perspective, the possibility of oncoming risk aversion after a downward reversal from the S&P 500 warns against buying the sentiment-sensitive Australian unit. Indeed, the correlation between the benchmark stock index and AUD/USD is now 0.84 (on rolling 20-day studies). With that in mind, we will continue to stand aside.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.