Market highlights from the last week

Wednesday June 10: risk appetite also deteriorated sharply as markets had priced in a strong recovery and adopted a more sober attitude following the Fed rhetoric

Thursday June 11: commodity currencies were undermined by weaker risk appetite during Thursday with sharp overall losses.

Friday June 12: CFTC data recorded only a small decline in short non-commercial Australian dollar positions in the latest week, maintaining the potential for short covering

Monday June 15: The Reserve Bank of Australia minutes stated that monetary support will be needed for some time, but it was slightly more optimistic over the outlook 

Tuesday June 16: commodity currencies also faded as the US currency recovered ground, although selling was limited with buying in early Europe on Wednesday

AUD/USD price analysis

Let us have a look at the technical viewpoint: 

Monthly: traded to a multi-year low of 0.5506 in March. We have seen two months of net gains in April and May. The trend of lower lows at 0.6920. 

Weekly: previous resistance seen at 0.7032 (week of December 30). Previous support located at 0.6670 (week of September 30)

Daily: mixed trading for the last five trading days. We can note spikes in both directions highlighting investor indecision. 

Intraday four-hour: a move to the 78.6 per cent pullback level at 0.7003 (from 0.7062-0.6776) will form a bearish intraday Gartley formation. We have a previous swing high located at 0.7012. This should act as a substantial barrier. The target level for this pattern is 0.6700. 

Outlook: the intraday outlook is mildly bullish. However, we look at this as an opportunity to get short for a larger correction lower

Possible trade setup: 

Action: selling at 0.7000

Stop: 0.7050

Targets: 0.6700 and 0.6670

Potential return on risk to first target:  R6 (reward 300 / risk 5)

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