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Talking Points:
- AUD/USD Technical Strategy: Short at 0.7895
- Aussie Dollar posts largest daily gain in 5 months after July FOMC minutes
- Bounce from two-month trend support, Flag chart pattern hint at gains ahead
The Australian Dollar shot sharply higher, posting the largest gain in five months against its US counterpart following the release of minutes from July’s FOMC meeting. Overall positioning hints that the rising trend established from May/June lows may be starting to resume.
From here, a daily close above the 23.6% Fibonacci expansion at 0.7979 opens the door for a test of the 0.8066-87 area (July 27 high, 38.2% level). Alternatively, a reversal back below the 14.6% Fib at 0.7913 clears the way for another challenge of the 0.7784-0.7821 area (38.2% Fib retracement, trend line).
While the stop-loss on the AUD/USD short position initiated at 0.7895 has not been triggered, the apparent completion of a Flag bullish continuation pattern hints at upside continuation in the near term. With that in mind, the trade has been closed with a small loss. Opting for the sidelines seems prudent for now.
Just getting started trading AUD/USD? Check out our beginners’ guide to help with your strategy!
