Australian Dollar Chops us Out - Standing Pat Until it Breaks
AUDUSD – Extremely choppy price action has forced similarly indecisive moves in our retail trader-based measure of forex positioning, and our sentiment-based strategies are flat until we see bigger swings in price.
Trade Implications – AUDUSD: In the past two weeks we’ve been chopped out of both an AUDUSD-long and an AUDUSD-short position as the pair continues to frustrate our trend-following Momentum2 system. I had previously cited the fact that Momentum2 had caught several key turns in the AUD as a major reason to follow the system’s trades, but I always use the same caveat—past performance is not indicative of future results.
Indeed we might see our sentiment-based strategies continue to get chopped out until the AUDUSD breaks out of its narrowing trading range. Key support is $1.04, while important resistance is $1.05. We’ll need a decisive break of either to get some good trend-based trades.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.