- AUD/USD Uptrend Pauses after 193 Pip Rally
- Bullish Breakouts May Begin Above 1.7567
- IG Client Sentiment Positive at -1.69; 63% Net-Short
The AUD/USD has rallied as much as 193 pips after advancing for the previous 4 trading sessions. For Thursday, the AUD/USD uptrend is now pausing with the creation of an inside bar. This technical pattern has been outlined by using Wednesday’s daily candle as a reference. Wednesday’s high is found at .7567 and may be referenced as a value of resistance. Alternatively, Wednesdays low at .7499 may be used as a value of daily support.
Going into this week‘s close, traders may monitor this developing pattern to trade a breakout. A move above .7567 would have the AUD/USD continuing its ongoing uptrend. In this bullish scenario, traders may use a 1X extension of the 68 pip inside bar range to find initial targets near .7635. If prices breakout lower, the same technique may be used to find initial bearish targets near .7431. Traders should note that a move to .7431 would place the AUD/USD back below its 10 day EMA (exponential moving average) at .7486, suggesting a change in the markets short term trend.
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Despite today’s pause in price action, sentiment figures for the AUD/USD still remain negative. IG Client Sentiment now reads at -1.69, with 63% of traders short the currency pair. Typically sentiment is used as a contrarian indicator, which may suggest that the AUD/USD may trade higher. In the event of a bullish breakout above .7567, traders should look for sentiment figures to move towards a negative extreme of -2.0 or more. Alternatively, in the event that prices breakout below support, traders may look for sentiment figures to return towards a more neutral reading.
— Written by Walker, Analyst for DailyFX.com
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