AUD/USD Technical Outlook: RBA levels to know

AUD/USD daily price chart

AUD/USD 240min price chart

Notes: A closer look at price action sees Aussie testing near-term downtrend support on building divergence. If we get a rebound on RBA look for resistance at 7634/44 backed by the April open at 7690- both areas of interest for possible exhaustion / short-entries.  Bearish invalidation stands at 7759.

Bottom line: IF Aussie is going to get a near-term recovery, this would be a good spot. Ultimately the break below the 2016 trendline does leave the broader risk lower while below basic channel resistance. 

A summary of IG Client Sentiment shows traders are net-long AUDUSD- the ratio stands at +2.39 (70.5% of traders are long) – bearish reading

Traders have remained net-long since April 19^th; price has moved 2.4% lower since then

Long positions are 10.3% higher than yesterday and 22.2% higher from last week

Short positions are 0.1% lower than yesterday and 0.7% lower from last week

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUDUSD-bearish contrarian trading bias from a sentiment standpoint.

Written by: Michael Boutros, Currency Strategist with DailyFX