AUD/USD Technical Analysis: Aussie Dollar Topping Still in Play
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AUD/USD TECHNICAL OUTLOOK: NEUTRAL
- Aussie Dollar selloff struggles to extend but bearish bias still valid
- Daily close above April high needed to neutralize selling pressure
- Shift in trader sentiment bolsters the case for an oncoming reversal
The Australian Dollar bounced after a retest of resistance-turned-support at a falling trend line that had been guiding it lower for most of the year until a recent breakout. Swing top resistance at 0.6570 remains in play however, implying that the bearish bias established by the breach of rising counter-trend support on May 1 continues to be valid.
With that in mind, the spotlight on the downside is initially on the 0.6214-54 inflection zone. Breaking below that on a daily closing basis may set the stage for a probe below the 0.60 figure. Alternatively, establishing a foothold back above 0.6570 may neutralize immediate selling pressure and open the door to retest the underside of formerly long-standing range support in the 0.6671-90 area.
AUD/USD daily chart created with TradingView
AUD/USD TRADER SENTIMENT
Retail sentiment data shows 57.01% of traders are net-short, with the short-to-long ratio at 1.33 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 has narrowed relative to yesterday and compared with last week. This warns thatthe Aussie Dollar may soon reverse lower.
See the full IGCS sentiment report here.
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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.