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AUD/USD Technical Analysis: Looking to Sell on Upswing

AUD/USD Technical Analysis: Looking to Sell on Upswing

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • AUD/USD Technical Strategy: Pending Short at 0.7290
  • Break of Three-Month Trend Support Hints Downside Follow-Through Ahead
  • Looking to Near-Term Upswing to Realign Risk/Reward Setup for Short Trade

The Australian Dollar is may be readying to make good on a bearishEvening Star candlestick pattern formed below the 0.74 figure against its US namesake. Immediate downside follow-through didn’t materialize after the pattern was completed but a break through rising trend line support set from late September now suggests sellers may be set to take the reins.

Near-term support is at 0.7199, the 14.6% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a challenge of the 23.6% level at 0.7086. Alternatively, a move above the 38.2% Fib retracement at 0.7387 clears the way for a test of the 50% threshold at 0.7535.

We are keen to enter short but prices are too close to support to justify a trade from the risk/reward perspective. With that in mind, we will establish an entry order to sell AUDUSD at 0.7290. If activated, the trade will initially target 0.7199 and carry a stop-loss to be activated on a daily close above the October 12 high at 0.7381.

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