AUD/USD Technical Strategy: NET SHORT AT 0.7492
- Australian Dollar rebound stops on test of downtrend resistance
- Break of support above 0.72 needed to signal bearish resumption
- Short AUD/USD trade remains in play absent confirmed reversal
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The Australian Dollar managed to capitalize as its US counterpart retreated against nearly all of its major counterparts but the dominant downtrend remains intact. Indeed, the upswing conspicuously stopped squarely at trend line resistance defining the descent from the double top established below 0.82 in January.
Turning to the four-hour chart, the pair is revealed to be sitting at support guiding the upswing from mid-September lows. A break below this barrier – now at 0.7220 – opens the door for a test of the 0.7139-43 area. Trend resistance is now at 0.7285. A daily close above that may precede a test back above 0.74.
On balance, the absence of a confirmed bullish reversal of the prevailing trend means the path of least resistance still favors Aussie weakness. With that in mind, the short AUD/USD position initiated at 0.7608 and then scale up, first near 0.7530 and then again at 0.7325, remains in play for now.
AUD/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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