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Australian Dollar Short-term Outlook: AUD/USD at Last Line of Defense

Australian Dollar Short-term Outlook: AUD/USD at Last Line of Defense

Michael Boutros, Strategist

Australian Dollar Technical Price Outlook: AUD/USD Short-term Trade Levels

  • Australian Dollar updated technical trade levels – Daily & Intraday Charts
  • AUD/USD sell-off approaching near-term uptrend support- risk for price inflection
  • Aussie resistance 6397-6401, 6513/39, 6660/70 - Support 6245, 6195 (key), 5979-6041

The Australian Dollar is poised for a sixth consecutive daily decline against the US Dollar with AUD/USD down more than 3.8% from the late-October high. The pullback is now approaching near-term support and the last lines of defense for the October rally. These are the updated targets and invalidation levels that matter on the AUD/USD short-term technical charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie technical setup and more.

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Australian Dollar Price Chart – AUD/USD Daily

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Chart Prepared by Michael Boutros, Technical Strategist; AUD/USD on Tradingview

Technical Outlook: In last month’s Australian Dollar Short-term Outlook I noted that that AUD/USD was, “approaching confluence support at multi-year lows and while the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into this threshold” The level in focus was 6195- a region defined by the 2008 low-close and converges on downtrend slope support. Aussie registered a low at 6170 before rebounding with price turning last week just ahead of downtrend resistance- is AUD/USD set to resume the yearly decline? I’m looking for validation.

Australian Dollar Price Chart – AUD/USD 240min

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Notes: A closer look at Aussie price action shows AUD/USD breaking below the weekly opening-range on the heels of yesterdays FOMC interest rate decision with the decline now approaching October trendline support. Just lower rests the 78.6% Fibonacci retracement of October rally at 6245 and 6195.

A break / daily close below this threshold is needed to mark resumption of the broader downtrend with such a scenario exposing the lower parallels (currently ~6100) and key support at 5979-6041- a region defined by the 1.618% extension of the 2021 decline, the 2008 low and the 78.6% retracement of the 2020 rally.

Weekly / monthly open resistance eyed at 6397-6401 backed by near-term bearish invalidation at 6513/39- a breach / close above this level is needed to suggest a more significant reversal is underway / a more significant low was registered last month.

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Bottom line: A break of the weekly opening-range takes the Australian Dollar back towards key support- the last line of defense for the bulls. From a trading standpoint, looking for inflection into the lower parallels for guidance over the next few days. Ultimately a break of the yearly lows would be needed to mark resumption towards 6000. Keep in mind we still have US Non-Farm Payroll (NFP) on tap tomorrow- stay nimble into the close of the week. Review my latest Australian Dollar Weekly Price Outlook for a closer look at the longer-term AUD/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Australian Dollar Trader Sentiment – AUD/USD Price Chart

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  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +2.91 (74.41% of traders are long) – typically bearish reading
  • Long positions are 4.24% higher than yesterday and 22.94% higher from last week
  • Short positions are 26.20% lower than yesterday and 37.48% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUD/USD-bearish contrarian trading bias from a sentiment standpoint.
AUD/USD Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -6% -11% -8%
Weekly -8% -13% -10%
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--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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