AUD/USD Technical Analysis: Double Top Reversal Underway?
AUD/USD TECHNICAL OUTLOOK: BEARISH
- Australian Dollar breaks trend line support, hints at Double Top below 0.66
- Break of interim support at 0.6368 may set the stage to challenge 0.62 figure
- Trader sentiment studies favor upside but a positioning flip may be underway
The Australian Dollar may have carved out a bearish Double Top reversal pattern below the 0.66 figure, putting it on the cusp of bearish reversal against its US counterpart. Prices edged below support defining the uptrend for the better part of a month.
Sellers seem to have their eyes set on the support shelf at 0.6368 from here. A break below that confirmed on a closing basis is likely to set the stage for a descent to challenge a cluster of back-to-back support levels in the 0.6202-61 area.
Reclaiming a foothold above falling trend line resistance set from the May 11 high seems like a prerequisite for neutralizing immediate selling pressure. Achieving as much seems to open the way for another challenge of resistance at 0.6570.
AUD/USD TRADER SENTIMENT
Retail sentiment data shows 60.9% of traders are net-short, with the short-to-long ratio at 1.56 to 1. IG Client Sentiment (IGCS) is typically used as a contrarian indicator, so traders being net-short suggests AUD/USD is biased upward.
However, the net-short tilt has narrowed compared with yesterday, with the number of traders on that side of the spectrum down 13.57 percent. While it is too early to extrapolate this to suggest a positioning shift is underway, a pivot in sellers’ favor may emerge with greater confirmation.
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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.