Retail AUD/USD Crowd Turns Net-Short Ahead of China CPI

February 09, 2015 at 05:55 pm

DailyFX.com -

Talking Points:

- AUD/USD Rebound Vulnerable to Slowing China Inflation- Opening Monthly Range in Focus.

- XAU/USD Outlook Remains Bearish; Close Below $1227-$1231 to Trigger Further Losses.

- USDOLLAR Risks Larger Correction as RSI Continues to Fall Back From Overbought Territory.

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AUD/USD

Chart - Created Using FXCM Marketscope 2.0

AUD/USD breaks out of descending channel even after the rate cuts from the Reserve Bank of Australia (RBA) and the People’s Bank of China (PBoC).
Looks poised for a large rebound as the Relative Strength Index (RSI) comes off of oversold territory; will keep a close eye on China’s Consumer Price Index (CPI) which is expected to slow to an annualized 1.0% in January, which would mark the slowest rate of growth since November 2009.
DailyFX Speculative Sentiment Index (SSI) may foreshadow a larger shift in retail positioning as crowd turns net-short AUD/USD, with the ratio currently standing at -1.06.

XAU/USD

Looks as though former resistance around $1227 (23.6% expansion) to $1231 (78.6% retracement) will act as near-term support, but favor the approach to sell-bounces in Gold as it fails to retain the bullish RSI momentum.
Want a break & close below the near-term support region to favor a further decline as the precious metal continues to carve a series of lower-highs.
Will favor the downside targets as a bearish trend takes shape on the RSI, with the next region of interest coming in around $1218 (78.6% expansion).

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USDOLLAR(Ticker: USDollar):

Index	Last	High	Low	Daily Change (%)	Daily Range (% of ATR)
DJ-FXCM Dollar Index	11821.91	11839.59	11807.63	-0.03	45.41%

Chart - Created Using FXCM Marketscope 2.0

Dow Jones-FXCM U.S. Dollar monthly opening range in focus as the RSI comes off of overbought territory; will keep a close eye on the ascending channel from back in July as the greenback faces a risk for a larger correction.
Nevertheless, long-term outlook remains bullish as the pickup in job/wage growth fuels expectations of seeing a Fed rate hike in mid-2015.
Former resistance zones remain in focus with the first area of interest coming around 11,721 (38.2% expansion).

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