This Great Graphic, created on Bloomberg, shows the recent price action of the Australian dollar. For the past month, corrective upticks have held a trendline. It comes in near $0.7150 today and a little below $0.7115 by the end of the week. 

At the moment, the technicals seem weaker than fundamentals. The release of the minutes from the recent central bank meeting will be released on Tuesday. They can be counted on to reiterate the somewhat more positive sounding press conference and the monetary policy statement. The central bank specifically cited the improvement in the labor market, and if on cue last week’s employment data was robust, with 40k full-time positions created. Although it may be too good to be true, with potential seasonal adjustment problems, the direction is desired.  

The Aussie has fallen nearly 4 cents since October 12. It is in the middle of the pack among the major currencies performance against the dollar since then, losing a net 3.7%. It has carved out a shelf near $0.7020. Provided it holds above $0.7070 now, the late shorts could be vulnerable. The trend line cited above corresponds to a 38.2% retracement of the decline since October 12. The 20-day moving average is found near $0.7155. 

On the weekly bar charts, the downtrend from September 2014 remains intact.  Last September the briefly traded at $0.9400. A trendline drawn off there and the May 2015 high near $0.8165, caught the late-October high near $0.7380. It comes in now near $0.7260. That would be a reasonable target if the $0.7150 resistance gives way. That roughly corresponds to the 61.8% of the decline since mid-October.  

Do not be confused. This is not a bullish call on the Australian dollar. This is a warning to Aussie shorts that they may be facing some near-term pressure. It may also give medium-term investors an opportunity get with the underling trend, which we believe is still lower.