AUD/USD: Poor risk reward outlook to short the Aussie

Even if the weekly chart shows a compelling bearish outside formation, the tapering of volume on the way down, coupled with the recovery in the AU vs US yield spread, suggests the fall may be ripped for a short-term recovery. If that’s the case, bulls must be aware that resistances will be found at unusually close intervals, which disallows much room for topside air pockets or void areas. The overall technical picture has been badly damaged as the market adjusts to worsening Australian and Chinese fundamentals. Today’s RBA’s Kent reassurance that rate cuts are not an option being considered could offer a bit of comfort, which could see a bit of a reprieve rally, subject to the risk environment as usual. Take as reference the levels provided above, as these are the areas where price will be attracted and repelled from. Overall, the risks remain skewed to the downside, with today’s bearish gap at the open a reflection of the buffeted sentiment towards the Aussie.