In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The Aussie recovery failed at major resistance against the US Dollar last week with our focus on the near-term pullback in price. These are the updated targets and invalidation levels that matter on the AUD/USD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
AUD/USD Weekly Price Chart
Notes: In my latest Aussie Price Outlook we noted that, “a breach / close above 6972 is needed to fuel the next leg higher targeting the yearly low-day close at 7005– look for a bigger reaction there IF reached” A brief stint into the 50% retracement of the yearly range failed post-NFPs on Friday with price closing the week below the figure.
Key weekly resistance remains at 7020/42 with a breach above the June 2018 resistance slope (currently ~7080s) needed to validate a larger turn in price. Support rests at the 61.8% retracement of the May advance (also the May 20th reversal-week close) at 6925. A downside break of this formation (currently around ~6900) would once again keep the 2016 low / low-week close into focus at 6827/55– look for a more significant reaction there IF reached.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: Aussie turned from a major resistance confluence last week and IF prices are indeed heading higher, losses should be limited to the lower parallel. From a trading standpoint, look for a support on a move lower to offer more favorable entries with a topside breach above channel resistance needed to shift the broader focus higher. Review my latest AUD/USD Price Outlook for a closer look at the near-term Aussie trading levels.
Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading
AUD/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long AUD/USD – the ratio stands at +1.84 (64.8% of traders are long) – bearish reading
- Traders have remained net-long since April 18th; price has moved 2.9% lower since then
- Long positions are 3.9% higher than yesterday and 8.0% higher from last week
- Short positions are 1.7% higher than yesterday and 14.7% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Aussie may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger AUD/USD-bearish contrarian trading bias from a sentiment standpoint.
See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!
Key Australia / US Data Releases
Previous Weekly Technical Charts
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex