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Talking Points:
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AUD/USD Technical Strategy: Flat
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Australian Dollar erases post-Brexit losses, threatens June swing top
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Risk/reward , technical considerations argue against triggering a trade
The Australian Dollar has all but erased losses sustained in the aftermath of the UK “Brexit” referendum against its US counterpart. The near-term uptrend from lows set in late May remains intact but the bearish break suffered earlier that very month seems to paint longer-term positioning as favoring weakness.
A daily close above the 50% Fibonacci expansion at 0.7649 opens the door for a challenge of the 61.8% level at 0.7768, followed by the April 21 high at 0.7835. Alternatively, a move back below the 38.2% level at 0.7530 sees the next downside barrier marked by a rising trend line at 0.7389.
Prices are too close to resistance to justify initiating a long position from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal hints it is premature to bet against near-term momentum and in line with the long-term trend. As such, opting for the sidelines seems prudent.
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