The AUD is close to finishing its most bullish month in 6 months, and whilst my bearish outlook remains in place, there's room for further upside.
Bullish volume in the AUD/USD has continued to increase whilst the reduction in short positions in the COTs has seen the largest 1-week shift since the decline in May 2013. This fuels my bias for further gains for the near-medium term, with price action also supporting this view. Currently within a suspected bullish channel and printing higher-highs and higher-lows, a run-up to 0.9350 seems inevitable.
For the near-term, Friday's close produced a Shooting Star Reversal to warn of near-term weakness and early Asia trading has now broken beneath Friday's low and the 200 day eMA. I suspect a revisit to 0.920 is likely but let's not get too carried away before the RBA Rate decision tomorrow, which may limit any adverse moves leading up to it.
However as of Friday's close the market expectations of a rate decrease to 2.25% (25bps) was only 2%, making it an almost given there will be no rates lowered in tomorrow's RBA meeting. If true then the retracement will be limited and I would seek a continuation of the uptrend. However in the [unlikely] event we do see a rate decrease then expect some fireworks and for AUD to drop back below the 0.9170 level.
Until then I will be seeking buying positions above 0.920.