AUD/USD bulls on the run below 0.7560
Matt Weller, CFA, CMT June 21, 2021 2:21 PM
Australian dollar bulls have seemingly gone into hibernation for the Southern hemisphere winter
It’s a new trading week and risk assets are bouncing back from last week’s big selloff. Some less-hawkish-than-feared comments from the Fed on an otherwise quiet day are garnering headlines, though a general sense of optimism over the official start to summer certainly isn’t hurting matters!
Of course, that summertime feeling only applies to the Northern hemisphere, and Australian dollar bulls have seemingly gone into hibernation for the Southern hemisphere winter, today’s price action notwithstanding. Looking at the chart of AUD/USD, rates broke down to a fresh year-to-date low Friday, slicing through their 200-day EMA in the process. Whether you view it as a “generic rounded top” pattern or a messier head-and-shoulders” setup, the price action over the last six months reflects distribution from buyers to sellers and will be difficult to rally back above any time soon.
Source: StoneX, TradingView
As the chart above shows, AUD/USD has retraced back to the proverbial “scene of the crime” – its breakdown below 0.7560 support. This breakdown-retest pattern is a common setup that allows bears who missed the initial breakout a secondary opportunity to enter short positions as long as rates remain below 0.7560. To the downside, the next logical level of support to watch will be previous-resistance-turned-support near 0.7400.
With a lackluster Australian retail sales report (0.1% m/m growth vs. 0.4% expected) already behind us, these are the other economic releases for AUD/USD traders to monitor this week:
- Tuesday: RBA Assistant Governor Ellis speech in Adelaide
- Wednesday: US Markit PMI surveys
- Thursday: US initial unemployment claims and final Q1 GDP revision
- Friday: US Core PCE price index
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.