AUD/USD Technical Analysis: Aussie Downtrend Set to Resume?
AUD/USD Technical Strategy: NET SHORT AT 0.7456
- Australian Dollar retesting nine-month downtrend resistance
- Near-term positioning hints bearish resumption likely ahead
- Short AUD/USD trade still in play, October low first in focus
The Australian Dollar has tepidly recovered to challenge trend resistance guiding it lower against its US counterpart since late January. That barrier is now in the 0.7136-0.7210 area. A daily close above that would neutralize the near-term bearish bias and initially expose the September’s swing highs in the 0.7304-15 zone.
Alternatively, a turn back below the October 8 low at 0.7041 sees the next significant barrier at 0.6900, the September 2015 bottom. That is closely followed by the January 2016 trough at 0.6827.
Shorter-term positioning favors the latter scenario. The four-hour chart reveals the appearance of negative RSI divergence on a test of inflection point resistance, hinting at ebbing upside momentum that might precede reversal. Confirmation on a break of counter-trend support is still pending however.
With that in mind, the short AUD/USD trade that was triggered at 0.7608 and subsequently scaled up – first near 0.7530, then at 0.7325 and most recently at 0.7205 – remains in play. The overall cost basis is 0.7456. A stop-loss will be triggered on a dictionary basis.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.