AUD/USD Technical Strategy: NET SHORT AT 0.7492
- Australian Dollar testing double bottom support from May 2016
- Monthly chart reveals 17-year rising trend support now broken
- Added short AUD/USD exposure expecting deeper down move
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The Australian Dollar has dropped to challenge double bottom support capping losses for over two years having resumed the downtrend against its US namesake (as expected). This barrier is in the 0.7145-65 area, with a break lower confirmed on a daily closing basis exposing the 38.2% Fibonacci expansion at 0.7025. Alternatively, a rebound above support-turned-resistance at 0.7238 opens the door for another challenge of trend-defining resistance, now in the 0.7288-0.7384 zone.
Turning to longer-term positioning, the monthly chart reveals that August marked the break of rising trend support guiding a structural Aussie advance for nearly two decades. That portends an on-coming decline to test below the 0.70 figure as just the first leg in what may prove to be far deeper downturn. With that in mind, additional short AUD/USD exposure was added at 0.7325 to the trade initiated at 0.7608 and then scaled up near 0.7530. The net cost basis for the overall position is now 0.7492.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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