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AUD/USD Technical Analysis: Aussie Dollar Upswing Fizzling?

AUD/USD Technical Analysis: Aussie Dollar Upswing Fizzling?

2020-03-04 03:00:00
Ilya Spivak, Head Strategist, APAC
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AUD/USD TECHNICAL OUTLOOK: BEARISH

  • Australian Dollar bounces to retest 2020 downtrend resistance
  • Move higher struggling at near-term Fib barrier, may unravel
  • Retail trader sentiment studies offering mixed directional cues

The Australian Dollar tagged the 78.6% Fibonacci expansion at 0.6464 as expected and rebounded, testing resistance guiding the currency lower against its US counterpart since the beginning of the year. An RBA monetary policy announcement and fourth-quarter GDP data along with a broad-based recovery in risk appetite helped fuel for the rise.

Neutralizing near-term selling pressure in earnest probably calls for a break above 0.6690, with confirmation of a breach secured on a daily closing basis. This level marks the outer layer of a range floor in play since early August 2019 and recast from support into resistance with a breakdown in February. Such a move would also pierce the year-to-date downtrend.

Thus far however, AUD/USD has tellingly struggled to overcome more immediate resistance at 0.6585, the 61.8% Fib. The pair probed above the former support but failed to sustain enough of the rise to close above it. If this proves to precede a turn lower that is extrapolated into a push below the 78.6% level, the spotlight will turn to the 100% expansion at 0.6309 as the next point of interest.

Australian Dollar vs US Dollar price chart - daily

AUD/USD daily chart created with TradingView

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AUD/USD TRADER SENTIMENT

Chart of Australian Dollar vs US Dollar exchange rate, trader sentiment

Retail sentiment data shows 74.79% of traders are net-long, with the long-to-short ratio at 2.97 to 1. The number of traders net-long is 0.64% higher than yesterday and 22.67% lower from last week, while the net-short count is 16.49% lower than yesterday and 0.63% lower from last week.

IG Client Sentiment(IGCS) is typically used as a contrarian indicator, so traders being net-long suggests AUD/USD may continue to fall.Positioning is less skewed to the long side than it was last week, which makes for an inconclusive directional lead from sentiment-based studies.

See the full IGCS sentiment report here.

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AUD/USD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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