The AUD/USD pair is tiring. USD weakness and good trade data from China saw AUD attempt higher levels, only to fade each time. Traders have heard it all before – and been burnt - but Aussie weakness may arrive once most traders have given up their shorts.

The chart below shows the last 3 peaks. The previous 2014 high was at 0.9463. Peak 2 shows penetration of this level, and a firm and emphatic rejection the next day when RBA Governor Stevens declared the AUD was overvalued “on any metric, and not by a few cents”. The rally to peak 3 followed trade data from China that showed the value of iron ore imports increased year on year, not just the volume. Once again, the rally quickly faded.

This may indicate underlying weakness. A fall through support at 0.9335 could be the trigger for fresh shorts, selling at 0.9330 with a stop loss above 0.9350. The initial target could be the support just above 0.9200 – giving a reward to risk ratio around 4:1.

chart of aud/usd