AUD/USD Daily Chart

Technical Outlook: The Australian Dollar has rallied nearly 3% since the start of the year with the prices now approaching near-term resistance targets at the 9/11 reversal-day close at 8026 and the 2017 high-day close at 8054. We highlighted this region early this month in my Weekly Technical Perspective and IF the market closes at these levels, prices will have posted an outside-day reversal off resistance – suggests bearish. Broad-based USD losses are a concern, but from a technical standpoint, the Aussie advance remains at vulnerable near-term while below these levels. Daily support rests at 7886/98.

AUD/USD 240min Chart

Notes: A closer look at near-term price action highlights a well-defined ascending channel formation extending off the December lows with Aussie trading just above channel support / weekly opening-range lows at 7956. A break/close below this threshold shifts the focus towards more significant support at 7886/98- an area of interest for near-term exhaustion / long-entries.

A breach above the high-day close at 8054 targets channel resistance around ~8100 backed by the 2017 high at 8125 and the 100% extension at 8153. Bottom line: the immediate advance is vulnerable but ultimately a pullback should offer more favorable long-entries. From a trading standpoint, I’m looking sideways to lower in price while below 8054 with a break higher ultimately targeting subsequent resistance objectives.

AUD/USD IG Client Sentiment

• A summary of IG Client Sentiment shows traders are net-short AUDUSD- the ratio stands at -1.83 (35.4% of traders are long) – bullish reading
• Retail has remained net-short since Dec 19th; price has moved 4.8% higher since then
• Long positions are 5.9% higher than yesterday and 6.2% higher from last week
• Short positions are 5.5% lower than yesterday and 7.5% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise. However, retail is less net-short than yesterday but more net-short from last week. The combination of current positioning and recent changes gives us a further mixed AUDUSD trading bias from a sentiment standpoint.

Relevant AUD/USD Data Releases