AUD/USD Technical Analysis: Aussie Down Trend Ready to Resume?
AUD/USD Technical Strategy: SHORT
- Australian Dollar rebound stalls ahead of resistance below 0.73
- Near-term chart positioning hints a top may be starting to emerge
- Compelling risk/reward parameters prompt AUD/USD short trade
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The Australian Dollar mounted a spirited recovery after briefly spiking to a ten-year low against its US counterpart. The advance has paused to consolidate below minor resistance at 0.7247. A daily close above this barrier opens the door for a test of the December swing high at 0.7393. Alternatively, a move back below resistance-turned-support at 0.7142 exposes the 0.7021-41 area anew.
Near-term positioning seems to suggest something more sinister than just a pause in the near-term uptrend is afoot. Prices have broken below near-term trend line support guiding them higher over the past week. That barrier has held up on initial upside retest, offering an early clue that perhaps more substantive topping is in the works.
With that in mind, a tactical short AUD/USD position has been activated at 0.7194. Initial aspirations on the trade are modest given the proximity of near-term support but risk/reward parameters look compelling to try positioning ahead of long-term down trend resumption. If the near-term breakdown fizzles, a daily close above relatively close-by resistance would make for a prompt exit ahead of a larger upswing.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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