Forex: AUD/USD - break of 1.0360 a potential trend-shifting event (Barcelona) - The AUD/USD has developed yet another leg higher, one that may represent the straw that break's the camel's back for the interest of sellers. The clean break above 1.0360 in thin markets exposes further upside now, as the downtrend structure gets distorted after the Feb 8 upswing at 1.0350 and Feb 1 resistance at 1.0360 both are out of the way.

Another reason to believe that the downtrend may be coming to an end is the break of AUD/USD corrective pattern. As pointed yesterday in our Asia open remarks, the AUD/USD had been developing 4 sequence of corrections since the bear trend picked up, yet each one was limited by over 95-100 pips runs before a resumption of the downtrend.

However, as Fan Yang, chief technical analyst at FXTimes, observed, "a pullback above 100 pips could change things." So far the pullback has extended to 145-150 pips.

Against the case for a bullish continuation, one may think that the upside break comes at a time when big players had little say as only New Zealand and Australian markets were open; however, the correction off 1.0220 lows has come in impulsive waves, which have been followed by persistent buying on shallow pullbacks along all session, a reflection that market participants' perception to sell Aussies may have shifted.

Yesterday, we also argued that the market might have gotten ahead of itself discounting RBA cuts, as recent confidence indicators in Australia may be forcing ultra-bears to rethink strategies to sell on strength.

In Mr. Yang view, the upside resolution above 1.0260, which also penetrates a falling channel resistance, "may allow further recovery to 1.0450-60", he says. On the way up, longs may find troubling areas at 1.0380 - Jan 28, 31, Feb 5 lows - followed by 1.04 round number and ahead of Fan's target, next significant swing high. Break and consolidation below 1.0330 should be the minimum requirement for sellers in order to restore some confident.

One trader still not convinced over the renewed strength on the Aussie is Sean Lee, founder at FXWW, who notes: "With hedge fund selling interest (they seldom leave firm orders preferring to see how the market trades when it reaches their level) reported ahead of 1.0400, I prefer to sell into strength looking for a re-test of the 1.0225 lows from earlier in the week."

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