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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar drops most in 4 weeks, breaks below key trend line support
- Risk/reward considerations argue against entering short position for now
The Australian Dollar moved sharply lower against its US namesake, dropping back below the 0.72 figure and yielding the largest daily drop in four weeks. Prices broke through trend lien support guiding the rebound since mid-January, hinting the longer-term down trend may be resuming.
From here, a daily close below the 38.2% Fibonacci expansion at 0.7046 paves the way for a test of the 50% level at 0.6980. Alternatively, a move back above the 23.6% Fib at 0.7127 sees the next layer of resistance at 0.7178, the 14.6% expansion.
We are keen to sell AUD/USD in line with our 2016 fundamental forecast. The available trading range is too narrow to justify entering at trade at current levels from a risk/reward perspective however. With that in mind, we will continue to stand aside and wait for a better-defined opportunity to present itself.
Are DailyFX analysts buying or selling AUD/USD in 2016? Find out here !
