The Australian Dollar surged earlier in the session on the back of a steep rise in the U.S. NASDAQ Composite. However, prices reversed suddenly as the currency neared its July 19, 2019 main top at .7082.
It may have been position-squaring ahead of the U.S. Federal Reserve’s monetary policy announcement on Wednesday, or it could have been renewed concerns over Australia’s tense relationship with China that triggered the dramatic reversal to the downside.
At 20:04 GMT, the AUD/USD is trading .6963, down 0.0056 or -0.80%.
In other news, a summary of IG Client Sentiment shows traders are net-short AUD/USD – the ratio stands at -2.22 (31.02% of traders are long).
Long positions are 9.38% lower than yesterday and 10.19% lower from last week. Short positions are 0.39% lower than yesterday and 9.24% higher from last week.
The data could mean that traders are getting progressively shorter, or if you’re a contrarian, you could take it as a bullish sign.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed early in the session when buyers took out yesterday’s high.
A trade through .6402 will change the main trend to down. This is highly unlikely, but there is room for a near-term pullback into 50% to 61.8% territory.
The minor trend is also up. A trade through .6506 will change the minor trend to down. This will shift momentum to the downside.
The minor range is .6506 to .7043. Its 50% level at .6774 is the first downside target.
The main range is .6402 to .7043. Its 50% level at .6722 is the second downside target.
A close under .7019 will form a potentially bearish closing price reversal top. If confirmed on Wednesday, it could trigger the start of a 2 to 3 day correction with potential downside targets coming in at .6774 and .6722.
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This article was originally posted on FX Empire
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