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AUD/USD Technical Outlook: RBA levels to know

IG Analyst

Publication date : 2018-05-01T06:49:16+0100

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Source: Bloomberg

Technical Outlook: In my latest Weekly Technical Perspective we highlighted a break below multi-year uptrend support in the Aussie with the risk lower heading into the monthly close. The Reserve Bank of Australia (RBA) interest rate decision is on tap in just under an hour. I’m looking for near-term support at 7480-7500- a break below this level would validate the breakdown with such a scenario targeting the 1.618% extension at 7379 backed by the 61.8% retracement at 7327.

AUD/USD daily price chart

AUD/USD 240min price chart

Notes: A closer look at price action sees Aussie testing near-term downtrend support on building divergence. If we get a rebound on RBA look for resistance at 7634/44 backed by the April open at 7690- both areas of interest for possible exhaustion / short-entries.  Bearish invalidation stands at 7759.

Bottom line: IF Aussie is going to get a near-term recovery, this would be a good spot. Ultimately the break below the 2016 trendline does leave the broader risk lower while below basic channel resistance. 

A summary of IG Client Sentiment shows traders are net-long AUDUSD- the ratio stands at +2.39 (70.5% of traders are long) – bearish reading

Traders have remained net-long since April 19th; price has moved 2.4% lower since then

Long positions are 10.3% higher than yesterday and 22.2% higher from last week

Short positions are 0.1% lower than yesterday and 0.7% lower from last week

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUDUSD-bearish contrarian trading bias from a sentiment standpoint.

 

Written by: Michael Boutros, Currency Strategist with DailyFX

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. 

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