AUD/USD Technical Analysis: Aussie Dollar May Break Range Floor

AUD/USD TECHNICAL OUTLOOK: BEARISH

• Australian Dollar recoiling from resistance to test pivotal range floor
• Confirmed break lower might precede probing below the 0.66 figure
• Retail trader sentiment studies offer mixed AUD/USD direction cues

Last week, the appearance of positive RSI divergence hinted that Australian Dollar selling pressure may be ebbing. That might have led into a consolidative pause or a corrective recovery before sellers reasserted the longer-term downward trend.

Current positioning seems to tilt in favor of the former scenario. Prices struggled at resistance capping the down move in play since the beginning of the year, failing to find follow-through on multiple forays to the upside. Capitulation may now be underway amid broad-based risk aversion.

AUD/USD is back to challenge range support in the 0.6671-90 area. A break below that confirmed on a daily closing basis may set the stage for a move below the 0.66 figure to challenge 0.6550. Re-establishing a foothold above 0.6755 is probably a prerequisite for neutralizing the near-term bearish bias.

AUD/USD daily chart created with TradingView

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AUD/USD TRADER SENTIMENT

Retail trader data shows 72.49% of traders are net-long with the ratio of traders long to short at 2.63 to 1. The number of traders net-long is 2.68% higher than yesterday and 5.91% lower from last week, while the number of traders net-short is 2.35% higher than yesterday and 20.08% higher from last week.

IG Client Sentiment(IGCS) is typically used as a contrarian indicator, so traders being net-long suggests AUD/USD may continue to fall.Positioning is more net-long than yesterday but less so versus last week. On balance, that makes for a mixed sentiment-based AUD/USD bias.

See the full IGCS sentiment report here.

AUD/USD TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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