AUD/USD Technical Analysis: Bearish Reversal Attempt Invalidated
AUD/USD Technical Strategy: FLAT
- Aussie Dollar roars higher as markets react to Powell comments
- Counter-trend support break invalidated, range top back in play
- Opting to wait for confirmation before re-entering short position
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The Australian Dollar managed to defend against another attempt at re-establishing the longer-term down trend, rebounding to overturn a break below counter-trend line support. The reversal came courtesy of broad-based US Dollar selling following comments from Fed Chair Jerome Powell, which the markets interpreted to mark a dovish turn in forward guidance.
From here, a daily close above resistance in the 0.7303-38 area opens the door for a challenge of August 21 high at 0.7382, followed by former support in the 0.7452-61 zone. Alternatively, a turn lower that clears support in the 0.7142-70 region opens the door for a retest of recent swing lows in the 0.7021-41 band. That barrier is reinforced by recently broken trend line resistance-turned-support set form late January.
The AUD/USD short position activated at 0.7231 has been stopped out. While bearish long-term positioning remains broadly intact, re-establishing exposure here seems premature. First, the markets seem determined to find reasons to unwind long-USD exposure. Second, an actionable near-term sell signal is conspicuously absent. With that in mind, opting for the sidelines appears to be prudent for now.
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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.