Talking Points
- The AUD/USD Initially Trades Higher on GDP Data
- Bullish Breakouts Failed, as Prices Declined Back Under .72554
- SSI Remains Short of Extremes, Reading at +1.85
AUD/USD 30 Minute Chart
(Created using Marketscope 2.0 Charts)
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The AUD/USD is trading lower this morning, after initially surging overnight on better than expected GDP data. AUD Gross Domestic Product (YoY) (1Q) was anticipated at 2.8%, but released at 3.1%. This news at least temporarily stemmed concerns that the Reserve Bank of Australia may be inclined to cut interest rates at their next meeting on monetary policy on June 7. Price action initially attempted to breakout on this news, pushing the AUD/USD above the R4 pivot at 0.72791. Now price action is trading back inside of today's 47.6 pip pivot range, suggesting a change in market conditions.
It should be mentioned that today's range begins at the R3 pivot, which is displayed above at a price of .72554. With prices trading back under this value, it opens up price action to test values of support. This includes the S3 pivot found at .72088. It should be noted, that bearish breakouts may begin under .71841. A movement to this value would be significant, as it would completely invalidate this morning's bullish momentum. In this scenario, traders may extrapolate 1X today's range to place preliminary bearish breakout targets near .71365.
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SSI (speculative sentiment index) for the AUD/USD is just short of extremes reading at +1.85. With 65% of positioning long, this normally suggests a bearish bias for the pair. In the event of a bearish breakout, it would be anticipated that SSI would move to extremes of +2.0 or greater. Conversely, in the event that the AUD/USD breaks out higher, traders should look for SSI to return towards more neutral values.
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