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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar invalidates last week’s upside channel break
- Risk/reward setup argues against selling into down move
The Australian Dollar overturned last week’s upside breakout against its US counterpart, with prices taking aim at monthly swing lows once again. The rally struggled to make headway and ultimately caved in on itself after unexpectedly disappointing Chinese PMI figures crossed the wires.
From here, a daily close below the 38.2% Fibonacci expansion at 0.7357 opens the door for a test of the May 9 low at 0.7329, followed by the 50% level at 0.7307. Alternatively, a turn back above the 23.6% Fib at 0.7418 paves the way for a challenge of the May 31 high at 0.7476.
The long position established at 0.7461 has been stopped out. While invalidation of the upside breakout argues for longer-term down trend resumption, prices are too close to immediate support to make entering short attractive from a risk/reward perspective. Opting for the sidelines seems most prudent for now.
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