AUD/USD - Bearish inverted hammer, 0.80 Put OI rises

• Bearish inverted hammer at 0.80 levels.
• Open interest (OI) at 0.80 strike Put rose on Friday.
• Correction ahead?

The AUD/USD pair faded the spike to 0.8039 on Friday and ended near the daily low of 0.7982; thus forming a "bearish inverted hammer".

The long upper shadow and a negative close highlights bull market exhaustion. After all, AUD/USD has rallied at least 500 pips in the last 6 weeks and hence looks ripe for correction as suggested by the overbought nature of the daily RSI (at 79 levels).

As of writing, the pair is nursing moderate losses below the 0.80 mark. A negative close today would add credence to Friday's bearish inverted hammer and may revive interest in AUD bearish bets (puts).

Investors seeking downside protection?

Also, AUD/USD Feb expiry options data published by the CME shows the open interest or open positions in put option at 0.80 strike increased by 206 contracts Friday. Meanwhile, the max IO buildup is seen at 0.77 levels. The rise in the open interest in at-the-money put and out-of-the-money put could be an indication of investors seeking downside protection against a potential pullback in the pair.

AUD/USD Technical Levels

A violation at 0.7980 (5-day MA) would open up downside towards 0.7937 (Jan. 16 low) and 0.7924 (support of trendline sloping upwards from Dec. 11 low and Jan. 10 low).On the other hand, breach of resistance at 0.80 (psychological hurdle) would expose Friday's high of 0.8039 and 0.8066 (Jul. 27 high).