AUDUSD HEAD AND SHOULDER MOVEMENT
Retail traders appear to be increasing their bullish bets on the Australian Dollar despite recent losses in the currency. This can be seen by taking a look at IG Client Sentiment (IGCS), which tends to behave as a contrarian indicator. Long bets are on the rise for AUD/USD and AUD/JPY, could this be a warning sign of further pain to come for the exchange rates?
On the daily chart, AUD/USD is coming off the worst month (-5.62% in April) since September 2014. Recently, the pair has left behind a bullish Morning Star candlestick pattern. Given further upside confirmation, this could hint at more gains to come. There is quite the room to go before the 20-day Simple Moving Average (SMA) will come into view to perhaps hold as resistance, maintaining the downtrend. On the downside, the 0.6968 – 0.7000 support zone is what stands between AUD/USD and lows from June 2020 (0.6777 – 0.6832).
Price action on the daily AUD/USD chart above shows bears looking to test the 0.7000 psychological support zone for the third time since December 2021. Short-term this does look probable with the dollar bid and the Chinese economy unlikely to make a swift turnaround. I will be looking for a confirmation break above 0.7183 (61.8% Fibonacci) to rethink the downside bias. If prices approach the 0.7183 resistance zone, this could be a great entry point for bears to re-enter.
On the daily chart, AUD/USD is coming off the worst month (-5.62% in April) since September 2014. Recently, the pair has left behind a bullish Morning Star candlestick pattern. Given further upside confirmation, this could hint at more gains to come. There is quite the room to go before the 20-day Simple Moving Average (SMA) will come into view to perhaps hold as resistance, maintaining the downtrend. On the downside, the 0.6968 – 0.7000 support zone is what stands between AUD/USD and lows from June 2020 (0.6777 – 0.6832).
Price action on the daily AUD/USD chart above shows bears looking to test the 0.7000 psychological support zone for the third time since December 2021. Short-term this does look probable with the dollar bid and the Chinese economy unlikely to make a swift turnaround. I will be looking for a confirmation break above 0.7183 (61.8% Fibonacci) to rethink the downside bias. If prices approach the 0.7183 resistance zone, this could be a great entry point for bears to re-enter.
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