AUD/USD TECHNICALOUTLOOK: NEUTRAL
- Aussie Dollar rally powers prices above 2020 downtrend resistance
- Resistance sub-0.67 might be retested, critical support above 0.62
- Trader sentiment studies skew bearish but warn a reversal is brewing
The Australian Dollar brushed aside last week’s would-be breakdown. The currency reclaimed the upper hand against its US counterpart after finding support above the 0.62 figure, powering through resistance capping gains since the start of the year.
A seemingly minor support-turned-resistance barrier at 0.6505 is now being tested, with a decisive breach confirmed on a daily closing basis probably setting the stage for a retest of the 0.6671-90 zone. Returning back below 0.6214 is perhaps a prerequisite for meaningful downtrend resumption.
AUD/USD daily chart created with TradingView
Zooming out to the monthly chart is a helpful reminder that the structural trend bias continues to tilt bearish. Within this context, prices are understandably reticent to break critical support marked by the 2008-9 lows, at least at first. As long as trend resistance near 0.70 isn’t broken however, recent gains seem corrective.
AUD/USD monthly chart created with TradingView
AUD/USD TRADER SENTIMENT
Retail sentiment data shows 54.26% of traders are net-short, with the short-to-long ratio at 1.19 to 1. IG Client Sentiment (IGCS) is typically used as a contrarian indicator, so traders being net-short suggests a bullish AUD/USD trend bias.
However, the net-short skew in overall positioning has narrowed relative to yesterday and compared with last week. This warns thatthe Aussie Dollar may be laying the groundwork to reverse lower, despite the bullish cues still evident in current positioning.
See the full IGCS sentiment report here.
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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
