AUD/USD Technical Analysis: Aussie Dollar Topping Still in Play

AUD/USD TECHNICAL OUTLOOK: NEUTRAL

• Aussie Dollar selloff struggles to extend but bearish bias still valid
• Daily close above April high needed to neutralize selling pressure
• Shift in trader sentiment bolsters the case for an oncoming reversal

The Australian Dollar bounced after a retest of resistance-turned-support at a falling trend line that had been guiding it lower for most of the year until a recent breakout. Swing top resistance at 0.6570 remains in play however, implying that the bearish bias established by the breach of rising counter-trend support on May 1 continues to be valid.

With that in mind, the spotlight on the downside is initially on the 0.6214-54 inflection zone. Breaking below that on a daily closing basis may set the stage for a probe below the 0.60 figure. Alternatively, establishing a foothold back above 0.6570 may neutralize immediate selling pressure and open the door to retest the underside of formerly long-standing range support in the 0.6671-90 area.

AUD/USD daily chart created with TradingView

Recommended by Ilya Spivak

AUD/USD Trading Preparation for the Week Ahead

Register for webinar

Join now

Webinar has ended

AUD/USD TRADER SENTIMENT

Retail sentiment data shows 57.01% of traders are net-short, with the short-to-long ratio at 1.33 to 1. IG Client Sentiment (IGCS) is typically used as a contrarian indicator, so traders being net-short suggests a bullish AUD/USD trend bias. However, the net-short skew has narrowed relative to yesterday and compared with last week. This warns thatthe Aussie Dollar may soon reverse lower.

See the full IGCS sentiment report here.

FX TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter