Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
AUD/USD May Drop Toward 0.74 as Prices Probe Past Range Floor

AUD/USD May Drop Toward 0.74 as Prices Probe Past Range Floor

Ilya Spivak,
What's on this page

AUD/USD TECHNICAL OUTLOOK: BEARISH

  • Australian Dollar may drop toward 0.74 if prices confirm range breakdown
  • Head and Shoulders topping pattern hints at extension toward 0.72 is ahead
  • Retail trader sentiment flags rebound possibility, but the signal is flimsy yet
How to Trade AUD/USD
How to Trade AUD/USD
Recommended by Ilya Spivak
How to Trade AUD/USD
Get My Guide

The Australian Dollar looks to be accelerating lower anew after a brief period of consolidation in a narrow range centered around the 0.76 figure. The currency are poking through support at 0.7564 against its US counterpart. Confirmation on a daily closing basis looks likely to open the door for a challenge of resistance-turned-support in the 0.7413-62 area.

Sizing up positioning more broadly, AUD/USD looks to have carved out a somewhat unsightly Head and Shoulders topping pattern, with the most recent digestive pause in the selloff following a break of the formation’s upward-sloping neckline. This construction implies deeper losses beyond the push toward 0.74, pointing to a measured move extending down to just above the 0.72 mark.

Neutralizing selling pressure appears to require a reversal upward that puts prices above the falling trend line connecting swing tops since late February. That would violate the series of lower highs and lows carved out over the past month – invalidating the near-term bearish bias by definition – and probably set the stage for a probe above the 0.78 handle. The peak near 0.80 follows thereafter.

Australian Dollar vs US Dollar price chart - daily

AUD/USD daily chart created with TradingView

AUD/USD TRADER SENTIMENT

IG Client Sentiment (IGCS) retail positioning data shows 53.63% of traders are net-long, with the long-to-short ratio at 1.16 to 1. This is typically used as a contrarian indicator, so the current setting suggests that the AUD/USD trend is biased downward.

However, traders are less net-long compared with yesterday and a week ago, which may imply that a shift in sentiment is brewing ahead. That might flag an on-coming rebound, but the narrow long/short split leaves ample room for positioning to become more extreme before such a move seems imminent.

AUD/USD retail trader positioning vs price

See the full IGCS sentiment report here.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Ilya Spivak
Improve your trading with IG Client Sentiment Data
Get My Guide

FX TRADING RESOURCES

--- Written by Ilya Spivak, Head Strategist, APAC 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.

DISCLOSURES