AUD/USD: Daily up-cycle quite mature, 100% proj target hit

Cycles & Levels: On the weekly, it’s the first time since January that the market breaks through its descending trendline. This milestone is the first technical development required to build for an eventual re-test of 0.75 even if such call still looks a distant prospect. It’s interesting to note that the Aussie has reached its 100% fib proj target, so I am definitely expecting the market to trade much more topish very much in line with the expected slowdown in the equities rally very short-term. That said, the up-cycle is firm and the resolution above a descending trendline confirm that. However, the leg appears to feel quite mature. On the hourly, I wouldn’t rule out the area at 0.7350/60 to act as an intraday buy opportunity on the confluence seen (trendline + support). Just be aware that the further upside should be significantly more difficult to come by. A break below the ascending trendline exposes a series of intraday support as marked in the chart above.

Correlations & Volumes: In terms of volumes, the increase in buy-side business support the overall buying bias but just be aware that the close by 5pm NY was below the POC. This makes the most immediate task at hand for buyers the re-take of 0.7280 ahead of 0.73. What this means is that you will be hard-pressed to provide strong arguments about engaging as a buyer at these hefty levels for an attractive risk-reward unless trading intraday swings. With regards to correlations, with the Chinese Yuan weakness back in the last 3 days even on a lower USD and the Aussie vs US yield spread trading within a tight range near trend lows, I’d say 0.73 and the swing high overhead 0.7315 hold value as areas to short intraday.