Trade of the week: short AUD/USD
Since last week's AUD/USD multi-month high has been accompanied by negative divergence on the daily relative strength index, we would like to go short with a stop loss above the current July high at $0.6596 and a downside target in the $0.6500 region.
(Partial video transcript)
This week's trading opportunity
Axel Rudolph: Hello and welcome to "Trade of the Week" on 14 July 2025. Let's look at today's trade to start with, and I thought perhaps we should look at AUD/USD . The reason being that we made a new multi-month high last week, but only marginally so.
Reasons for choosing this trade option
So we're struggling to go higher here. That high has been accompanied by a lower high on the daily relative strength index (RSI). So, basically, we are seeing negative divergence on our oscillator. That can be an early warning sign for at least a short-term correction potentially taking place here. You can see we've made a higher high on the price chart but a lower high on the oscillator.
Now, obviously, it's a risky trade because we're sort of trading against the trend. As you can see, we have a series of higher highs and higher lows. So it's possible that the trend is going to continue. But because we've got a very tight stop, I think I'd still like to put this one on. It would be to go short at current levels with a stop-loss above the high seen on Thursday of last week, which was, I think, about $0.6596, and have a downside target around the $0.65 area.
We'll look at this again in more detail in a minute.
Previous week's trading outcome
I'd like to very quickly mention last week's "Trade of the Week", which is still short from slightly lower levels. We still have our stop-loss in place above the high seen back in April and a previous high from further back in time, which was this high here.
So basically, we're still below our highs, our resistance. That trade is still ongoing.
This week's trade in summary
Returning to AUD/USD, the "Trade of the Week" is to go short AUD/USD at around current levels with a stop-loss above the current July high, which was made, let's say, around $0.6596, and a downside target around the $0.65 area.
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