AUD/USD Technical Strategy: Flat
- Aussie Dollar in digestion mode after sinking to a three-week low
- Near-term trend bias bearish but entering short seems premature
- Tactical long position unattractive on risk/reward considerations
The Australian Dollar is digesting losses after hitting a three-week low against its US counterpart but the overall trend continues to favor weakness. Improving risk appetite has helped arrest selling pressure beating down the sentiment linked currency following last week’s bloodletting.
Resistance is marked by the March 22 swing high at 0.7785, with a daily close above that exposing a falling channel top at 0.7894. Immediate support is in the 0.7663-76 area (channel floor, 23.6% Fibonacci expansion).A push below that exposes a rising trend line guiding the longer-term advance from January 2016.That currently sits at 0.7608.
An actionable trade setup seems absent at this stage. Entering short seems premature absent clear-cut evidence suggesting the down move is resuming while a tactical long trade is unattractive from a risk/reward perspective given prices’ proximity to resistance. On balance, standing aside appears to be most sensible.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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