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The technical picture continues to look better and better for AUD/USD buyers

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AUD/USD breaks the downwards trendline resistance for the year


If you’re going to pull off a squeeze, do it right. And that’s what AUD/USD buyers have done yesterday. The move higher not only took out resistance levels at 0.7150 and 0.7200, but more importantly it broke the trendline resistance for the year.
Price now looks towards a test of the 100-day MA (red line) @ 0.7272 and then comes the September high of 0.7315. Hold a break above those levels and the squeeze higher will extend to the next leg towards 0.7400 aiming the July highs.
I will reiterate again that fundamentally nothing has changed between the aussie and the dollar. Things are still the same as it was a month ago. The only difference we have here is the shift in mood (more risk-on) but also the change in sentiment/attention. Focus has now shifted towards positioning as selling reaches exhaustive levels – failing to break 0.7000 – and it only takes a small leak to break the dam.
And the excessive short positioning in the aussie has started to rear its ugly head in that regard. In times like this, we can argue all we want about fundamentals but when when the charts and the flows don’t support it then there is no case to be had.
There is no doubt that the aussie will continue to struggle in the months ahead but now is not the time for that. When the chart is something like what we see above, why fight it?

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