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AUD/USD Technical Analysis: Exiting Short Trade After Surge

AUD/USD Technical Analysis: Exiting Short Trade After Surge

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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar Produces Largest Daily Advance in Six Weeks vs. US Counterpart
  • Exiting Short Position to Wait for Another Selling Opportunity to Present Itself

The Australian Dollar launched sharply higher against its US counterpart, producing the largest daily advance in six weeks. Prices have now broken the series of lower highs and lows established from mid-October, seemingly overturning the near-term bearish trend bias.

From here, a break above the 38.2% Fibonacci expansion at 0.7197 opens the door for a test of the 50% level at 0.7253. Alternatively, a move back below the 23.6% Fib at 0.7128 – now recast as support – clears the way for a challenge of the 14.6% expansion at 0.7085.

We entered short AUDUSD at 0.7058. Prices have not met the conditions set out to trigger the stop-loss but we will exit the trade regardless. The break of trend line resistance set from the October 12 swing high warns that the balance of power has shifted to favor the bulls in the near term. The dominant long-term trend remains bearish however. With that in mind, we will stand aside for now until another trading opportunity presents itself.

Losing Money Trading Forex? This Might Be Why.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.