Aussie rally to offer favorable entries

DailyFX forex winners and losers

The Australian dollar is the top performer ahead of the US open with an advance of 0.17% on the session. Risk appetite is on the rebound in European trade with equity markets in the black across the board after EU leaders announced they would give Spain an extra year to achieve its 3% budget deficit target while granting access to up to €30 billion in funding to the banking sector by the end of the month. The news temporarily alleviated concerns over a banking crisis in Spain and offset disappointing trade data out of China in the overnight session.

The AUD/USD continues to hold within the confines of an ascending channel formation with the pair failing an attempted breach above the 100-day moving average at 1.0245. Subsequent daily resistance targets are seen just above at the 200-day moving average at 1.0270 and the 50% Fibonacci extension taken from the June 1st and 25th troughs at 1.0290. We maintain our bearish outlook with only a breach above the monthly highs at 1.0330 invalidating this particular trade setup. A break below channel support eyes immediate targets at former January lows at 1.0146 with a break below the 23.6% extension at 1.0120 offering further conviction on our directional bias.

The scalp chart shows the AUD/USD holding just above the 38.2% extension at 1.0215 with a break below this level eyeing subsequent support targets at 1.0180, 1.0155 and the 23.6% extension at 1.0120. Soft interim resistance stands at 1.0235 backed by 1.0260 and the 50% extension at 1.0290. Note that RSI is now attempting a break below the 60-mark with such a scenario offering further conviction on intra-day aussie short scalps.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0271

100-Day SMA

1.0246

50-Day SMA

1.0013

2012 AUD HIGH

1.0858

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