AUD/USD Technical Strategy: BEARISH
- Aussie Dollar still stuck in a range below 0.72 figure vs US namesake
- Overall positioning hints at bearish Triangle formation taking shape
- Daily close below 0.7054 might mark initial confirmation of reversal
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The Australian Dollar continues to be mired in a choppy range below the 0.72 figure against its US counterpart. While this speaks to near-term indecision, the currency’s inability to build higher following November’s break above trend resistance guiding prices higher since January 2016 seems telling.
Indeed, the series of lower highs from early December may be carving out a Triangle formation. That typically marks consolidation before the resumption of the preceding trend. In this case, such a setup would carry decidedly bearish implications. Confirmation is still pending at this time however.
Prices are sitting squarely atop support in the 0.7054-76 area, making a short position seem unattractive from a risk/reward perspective. On the other hand, opting for the long side – even as a tactical trade without pretentions to lasting follow-through – might be seen as premature absent a clear bullish reversal signal.
Incoming event risk by way of the RBA monetary policy announcement might be another reason that traders are discouraged from committing to directional bet one way or the other at the moment. We will be tracking the rate decision and its AUD/USD impact live.
AUD/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter