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Trading news
28 Aug 2017
AUD/USD Risk Reversal is flat lined, bullish break unlikely?
Thursday’s Doji candle on the AUD/USD was followed by a positive move on Friday, thus signaling heightened odds of a break above the key technical resistance of 0.7963 [Aug 17 high]. Currently, the spot is trading around 0.7940.
- The one-month 25-delta risk reversal, which shows the difference in volatility between puts and calls [OTM 25-delta], suggests the break above 0.7963 is unlikely.
- The chart above shows the risk reversal has remained unchanged at -0.775 for four trading days, including today.
- A negative number indicates Puts [downside bets] are more in demand compared to Calls.
- Only an improvement in the risk reversal, coupled with a bullish break in the spot above 0.7963 would open doors for a sustained move higher to July 27 high of 0.8066.