Australian Dollar Chops Around - Watch Critical Support for Next Move
Trade Implications – AUDUSD: Last week we wrote that we were plainly in favor of fresh AUDUSD-long positions as our sentiment-based Momentum2 bought from $1.0472. If the facts change, however, we must change. Retail traders have since bought aggressively into AUDUSD weakness; long positions are up a substantial 83 percent since last week while short orders have fallen 31 percent.
The same SSI-based trading strategy is now short AUDUSD from $1.0300, while our volatility-friendly Breakout2 strategy has likewise sold from $1.0326. We’re most often hesitant to flip direction on a specific currency pair so rapidly; it leaves us susceptible to getting chopped out in both directions. Yet a break of key support at $1.02 would further cement our AUD-bearish trading bias.
--- 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.