AUD/USD: Bullish Outlook Near-Term Still Justified

I am going to reiterate what I wrote yesterday. This is the market with the clearest buy-side bias out of the majors analyzed, only challenged by the downside potential available in USD/CAD. The technicals are looking bright from a cycle’s standpoint, with higher highs and higher lows achieved since last Friday. The slow stoch has now come into oversold conditions. But what makes it compelling is to cross-check the status of the intermarket flows to realize the current levels make for an interesting proposition to consider long-side campaigns on the basis of a rising inverted DXY+Yuan (red line), bullish mood in equities (orange line) while the AU-US 5-yr yield spread stays relatively subdued. The upward slope in the 25-HMA of these correlated instruments is a testament that we are in a discounted opportunity. These are the times when the risk-reward can be the most attractive, that is, whenever intermarket flows still point higher yet the pair can be, in this case, bought at oversold conditions based on the slow stoch measures. At the most granular level, it is down to each individual to decide what strategies are best suited to exploit what I perceive a buy-side opportunity.