- AUD/USD trading in key consolidation range ahead of major event risk- intraday levels to know
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The Reserve Bank of Australia (RBA) interest rate decision is on tap tonight and Aussie is trading right in the middle of a multi-month consolidation pattern we've been tracking for weeks now. Here are the updated targets and invalidation levels that matter for AUD/USD heading into the release. Review this week's Strategy Webinar for an in-depth breakdown of this setup and more.
AUD/USD Daily Price Chart
Technical Outlook: In my Weekly Technical Perspective on the Australian Dollar , we highlighted that the, " broader short-bias is vulnerable while above 7327 . From a trading standpoint, we're looking for a break of the 7327-7505 range for further guidance. " Aussie has continued to consolidate within the confines of the initial June opening range with major event risk on tap this week.
Resistance stands with the July trendline / May low-day close around ~ 7445/56 with critical support steady at 7327 - a break / close below this level would exposes subsequent support objectives at 7230 and the 2017 open at 7200 . Ultimately a breach above 7494 would be needed to suggest a more significant low is in place.
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AUD/USD 240min Price Chart
Notes: A closer look at AUD/USD price action further highlights this consolidation pattern with the lower bounds of the range now converging on the key 7327/36 support zone - a region defined by the yearly low-day close and the 61.8% retracement of the 2016 advance . A downside break targets 7298 backed by 7230 . Initial resistance stands at the May lows at 7412 backed by the trendline resistance and 7456 .
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Bottom line: We're looking for a break of this consolidation range in Aussie with event risk this week likely to offer a catalyst in price. Specifically, looking for a reaction off the 7327/36 zone with the broader short-bias at risk while above this threshold. From a trading standpoint, I still favor fading weakness into this zone but RESPECT the break- IF we get it, it's likely to be rather sharp and decisive.
For a complete breakdown of Michael's trading strategy, review his Foundations of Technical Analysis series on B uilding a T rading S trategy
AUD/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.87 (65.1% of traders are long) - bearish reading
- T raders have remained net-long since Jun e 5 th ; price has moved 2.3% lower since then
- Long positions are 4.1% higher than yesterday and 7.7% lower from last week
- Short positions are 9.8% higher than yesterday and 1.8% 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. 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- Le arn more about sentiment!
Relevant AUD/USD Economic Data Releases
Economic Calendar - l atest e conomic d evelopments and u pcoming event ri sk
Other Setups in Play
- GBP/AUD Technical Outlook: Price Testing Major Trend Support
- XAU/USD Price Analysis: Gold Bounces from Fibonacci Support
- EUR/USD Price Analysis: Euro Poised to Break with ECB / US GDP on Tap
- Written by Michael Boutros , Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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