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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar soars to break 15-month resistance vs. US counterpart
- Betting on upside follow-through in the near term may be premature
The Australian Dollar soared past resistance capping gains since April 2016 against its US counterpart, hinting that a lasting trend reversal may be in progress. Explosive gains followed as Fed rate hike prospects fizzled after the failure of a US healthcare reform bill backed by the White House.
From here, a daily close above the 38.2% Fibonacci expansion at 0.7979 opens the door for a challenge of the 50% level at 0.8039. Alternatively, a reversal back below the 23.6% level at 0.7904 paves the way for a retest of the April 21 high at 0.7835, now recast as support.
While the magnitude of the move higher is certainly impressive, betting on lasting follow-through does not seem particularly attractive. Worrying economic news-flow raises a red flag as the spotlight turns to domestic affairs with the release of jobs data ahead. With that in mind, the sidelines seem most attractive.
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