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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar posts largest daily gain in four months vs. US counterpart
- Profit taken on short exposure, waiting to re-enter after upswing fizzles
The Australian Dollar is mounting a spirited recovery against its US counterpart, with prices posting the largest daily advance in four months. The dominant trend continues to favor weakness however while the series of lower highs and lows set from early November remains unbroken.
Near-term resistance is at 0.7306, the 23.6% Fibonacci retracement, with a break above that on a daily closing basis exposing the 0.7367-96 area (trend line, 38.2% level). Alternatively, a reversal below the 14.6% Fib at 0.7250 opens the door for a retest of the 0.7145-60 zone (May 24, December 23 lows).
A short AUD/USD trade was established at 0.7420 and partial profit has been taken. The rest of the trade will now be closed as prices embark on a larger-scale correction. The position will be re-established once the upswing shows signs of exhaustion and a viable bearish reversal signal emerges.
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