This week’s top performer against the US dollar is the Australian dollar, with AUD/USD rallying to over 1.6% since it opened again on Sunday.
Now, the Australian dollar has been taken to new highs for the year today following a breakout over critical confluence resistance, allowing the bulls to remain in control while over the yearly open for 2020.
The price has been holding steady below the yearly open resistance zone for 2019/2020 for almost a fortnight, with AUD/USD today being able to break higher in European trade.
A closer examination of the Australian price action shows that AUD/USD is trading in the confines of a pitchfork formation that is very much on the ascent, with today’s breach being well above the median line. The Australian dollar is trying to achieve a breakout of major technical resistance, with the focus staying at a higher level than the yearly highs while it is still within this current formation.
Traders should be looking to raise protective stops and reduce long exposure on any stretch heading into the upper parallels. An IG client sentiment summary has revealed that traders are net-short AUD/USD with the ratio standing at -2.62%, with 27.6% of traders being long in a bullish reading of events.
The long positions have declined by as much as 19.51% from the day before, and 24.42% lower than was the case last week. On the other hand, short positions have increased by 5.26% from the previous day and by as much as 10.25% from last week.
The fact that traders are net-short and more so than the day or the week before could mean that AUD/USD prices will only continue to increase. The combination of recent changes along with current positioning means that from a sentiment standpoint, there is a much stronger AUD/USD-bullish contrarian trading bias.
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