(MENAFN - DailyFX) breaks above February slope resistance focus is on a larger recovery while above7160 Check out our 3Q projections in our Join Michael for Live Weekly Strategy Webinars on The is up nearly 4% off the yearly lows with the rally breaking through yearly down-trend resistance this week. Here are the updated targets and invalidation levels that matter on the AUD/USD charts this week. Review this week's for an in-depth breakdown of this setup and more.
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AUD/USD Daily Price Chart Technical Outlook: In my latest we highlighted a multi-month resistance slope in price with our ‘bottom line' favoring the long-side while above the low-day close at 7087. A breach above confluence resistance at 7239 yesterday has clears the way for a larger advance with our focus higher in Aussie while above the trendline confluence around ~7160 (yellow).
Initial daily resistance stands at 7327/36 with a breach / close above the upper 50-line targeting a more significant zone at 7446/56 where the 38.2% retracement of the yearly range and the May low-day close converge on resistance (note the 200-day moving average just higher).
AUD/USD 240min Price Chart Notes: A closer look at price action shows AUD/USD trading within the confines of a slope series originating off the late-October lows (red). Initial support rests at back at 7239 with our near-term focus higher while above the lower parallel / weekly open support at 7191.A break below 7160 would beneeded to suggest a more significant high is in place. Look for a breach above 7336 to fuel the next leg targeting 7374 and key resistance at 7446/56.
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Bottom line: AUD/USD has broken above multi-month slope resistance and although the broader outlook remains constructive, the advance may be vulnerable near-term while below 7327/36. From a trading standpoint, we'll continue to favor fading weakness while above weekly open support targeting a breach of the October highs. A break lower would invalidate the reversal play with such a scenario exposing a drop back towards the yearly low-day close at 7086 (note monthly open comes in at 7072).
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AUD/USD Trader Sentiment A summary of shows traders are net-long AUD/USD - the ratio stands at +1.03 (50.6% of traders are long) neutral reading Long positions are 2.0% lower than yesterday and 18.2% lower from last week Short positions are 10.8% higher than yesterday and 45.8% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD / USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current AUD/USD price trend may soon reverse higher despite the fact traders remain net-long. See how shifts in AUD/USD retail positioning are impacting trend-
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- Written by , Currency Strategist with DailyFX
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