Australian Dollar Breakout Vulnerable into RBA


The Australian Dollar has rallied greater than 1.3% off the yearly lows in opposition to the US Dollar with the late-May breakout now testing preliminary resistance targets. These are the up to date targets and invalidation ranges that matter on the AUD/USD charts heading into the weekly / month-to-month open. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and extra.

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AUD/USD Daily Price Chart

AUD/USD Price Chart - Aussie Daily - Australian Dollar vs US Dollar Outlook

Technical Outlook: In our final AUD/USD Trade Update we famous that worth was approaching preliminary resistance at,6911 backed intently by the higher parallel of the pitchfork we’ve been monitoring because the month-to-month high- in the end a topside breach / shut above 6934 is required to recommend a bigger restoration is underway.” Aussie closed the month at 6936 with worth rallying right into a confluence resistance early within the week at 6965/72– the advance would want to carry under this vary to recommend this rebound was merely corrective.

That stated, a breach / shut above 6972 is required to gas the subsequent leg increased concentrating on the yearly low-day shut at 7005– search for a much bigger response there IF reached. The commerce stays constructive whereas inside this near-term ascending channel formation.

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AUD/USD 120min Price Chart

Aussie Price Outlook: Australian Dollar Breakout Vulnerable into RBA

Notes: A more in-depth have a look at worth motion reveals Aussie buying and selling inside the confines of an ascending pitchfork formation extending off the May lows with the 75% line converging on the 6965/72 resistance zone. An outside-reversal candle off the highs alongside near-term worth divergence into this zone suggests the rapid advance could also be weak right here – Initial help rests at 6944 backed by the weekly open at 6926. Broader bullish invalidation rests at 6911. A topside breach retains the deal with the higher parallel (at present ~6990) backed by the 7005.

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Bottom line: The rapid focus is on a near-term resistance right here at 6965/72. The advance could also be in danger near-term however he broader focus stays increased whereas above 6911. From a buying and selling standpoint, a great spot to scale back long-exposure / elevate protecting stops – search for draw back exhaustion / fade weak point on a pullback into the decrease parallels with a breach / shut above this area wanted to mark resumption of the late-May breakout. Keep in thoughts the Reserve Bank of Australia (RBA) rate of interest resolution is on faucet tonight with markets largely anticipating a 25bps cut- tread calmly. Review my newest AUD/USD Weekly Price Outlook for a longer-term have a look at the technical image on the Loonie.

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AUD/USD Trader Sentiment

AUD/USD Trader Sentiment - Aussie Positioning - Australian Dollar vs US Dollar Price Chart

  • A abstract of IG Client Sentiment reveals merchants are net-long AUD/USD- the ratio stands at +1.75 (63.6% of merchants are lengthy) – bearishstudying
  • Traders have remained net-long since April 18th; worth has moved 2.2% decrease since then
  • The proportion of merchants net-long is now its lowest since Apr 18th
  • Long positions are4.3% decrease than yesterday and 12.2% decrease from final week
  • Short positions are18.0% increased than yesterday and 18.0% increased from final week
  • We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-long suggests Aussie costs might proceed to fall. Yet merchants are much less net-long than yesterday & in contrast with final week and the recent adjustments in sentiment warn that the present AUD/USD worth pattern might quickly reverse increased regardless of the actual fact merchants stay net-long.

See how shifts in AUD/USD retail positioning are impacting trend- Learn extra about sentiment!

Relevant Australian / US Data Releases

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– Written by Michael Boutros, Currency Strategist with DailyFX

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