The above weekly chart of the AUD/USD clearly shows that Australian dollar has decisively broken below its rising range that has been in place since 2015. In the last to last week of April, it broke below the range instead of a bounce back and has so far stayed below.
In our last review here, https://www.econotimes.com/FxWirePro-Call-Review-Is-AUD-USD-in-a-sell-breakout-1318301 we asked whether Aussie is really in a sell breakout or not by pointing to the fact that despite the break, there is no follow-up momentum and to the recent formation of a Doji (indecision) candle in the weekly chart.
We also cleared our stance on the Aussie, https://www.econotimes.com/FxWirePro-Call-Review-AUD-USD-likely-to-decline-further-as-rising-range-breaks-1290483
“This break doesn’t threaten our longer-term bullish outlook for the AUD/USD and the stop loss for the trade is still far away at 0.68 area. Nevertheless, this break demands a re-assessment and we believe that one can take up one of the three possible actions,
- Maintain the long positions that we entered around 0.763 and keep buying AUD/USD at lower prices, which would bring down the average price of purchase for the longer horizon call.
- Square off positions at 100 pips loss and wait for the opportune moment to renter bullish positions.
- Play short term short side. If this is your preference, our calculations suggest that AUD/USD can decline to as low as 0.708 area. The interim targets are 0.74 area and 0.72 area.”
And our preference to the buy side.
However, our latest calculations suggest that Aussie, despite our preference for the buy side and despite this sell breakout turning out to be a false one, the bulls are likely to struggle. Expect selling pressure as it tests a re-entry to the range. But more importantly, we expect sellers to emerge with force, once Aussie reaches around 0.78 area against the dollar.
