Both AUD/JPY and AUD/USD have seen their multi-month uptrend slow in recent weeks, but that doesn‘t mean that there isn’t more fuel left in
the tank for gains. A bull flag in AUD/JPY rates and a bullish falling
wedge in AUD/USD rates suggest that more upside is possible soon.To get
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The forex economic calendar for the coming week is devoid of significant Australian economic data, putting the onus on American and
Chinese data to guide the major AUD-crosses.
According to the IG Client Sentiment Index, both AUD/JPY and AUD/USD rates have a mixed bias in the near-term.
The Australian Dollar typically follows risk trends, and with global equity markets trading choppily in recent weeks around volatility
in global bond yields, the antipodean currency has been able to make
much progress with respect to its multi-month uptrend. And while both
major AUD-crosses, AUD/JPY and AUD/USD, have seen their gains slow, that
doesn‘t mean that there isn’t more fuel left in the tank for further
gains. Indeed, with a bull flag forming AUD/JPY rates and a bullish
falling wedge forming in AUD/USD rates, the major AUD-crosses may soon
turn higher.
Australian
AUD/USDs uptrend from the March and November 2020 lows remains
impaired, with the mid-March attempt higher failing to recapture the key
trendline. But hope springs eternal: it may be the case that a bullish
falling wedge is taking shape on the daily timeframe, with support drawn
from the early-January high and early-March low, and resistance drawn
from the late-February high and mid-March high.
If this is the correct interpretation of price action, a breach of resistance coinciding with AUD/USD trading above its daily 21-EMA would
be a necessary precursor before any confidence in the bullish falling
wedge is validated. For what its worth, AUD/USD may continue to
underperform AUD/JPY in an environment that remains appealing (from a
technical perspective) for the US Dollar.
AUD/USD: Retail trader data shows 54.98% of traders are net-long with
the ratio of traders long to short at 1.22 to 1. The number of traders
net-long is 8.29% higher than yesterday and 11.15% higher from last
week, while the number of traders net-short is 16.37% higher than
yesterday and 2.74% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall.
Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives
us a further mixed AUD/USD trading bias.In the prior AUD/JPY forecast
update on March 18, it was noted that “AUD/JPY rates are working on a
daily bearish hammer, not quite a bearish key reversal just yet. Still
above its daily EMA envelope, its too early to say that this is the
top.” The March 17 proved to be the high for the month of March,
although by-and-large the pair remains in the confines of the February
25 high/February 26 low range.
With AUD/JPY still maintaining its uptrend from the March and November 2020 lows (unlike its AUD/USD brethren), the pair appears to be
in the midst of a sideways consolidation, which in context of the
preceding move, looks like a bull flag. More gains may be coming soon; a
lost of the February 26 low at 81.98 would invalidate the nascent
bullish perspective.AUD/JPY: Retail trader data shows 38.84% of traders
are net-long with the ratio of traders short to long at 1.57 to 1. The
number of traders net-long is 16.05% higher than yesterday and 3.09%
lower from last week, while the number of traders net-short is 7.64%
higher than yesterday and 0.34% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/JPY prices may continue to rise.
Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes
gives us a further mixed AUD/JPY trading bias.
