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AUD/USD Weekly Technical Perspective– Aussie Targets 2018 Lows

AUD/USD Weekly Technical Perspective– Aussie Targets 2018 Lows

2018-10-03 19:39:00
Michael Boutros, Technical Strategist
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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. The Australian dollar has plummeted more than 2.6% from the late-September highs with the decline now approaching the yearly lows heading into the start of the 4Q. Here are the key targets & invalidation levels that matter on the AUD/USD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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AUD/USD Weekly Price Chart

AUD/USD Price Chart - Weekly

Notes: We’ve been tracking this descending pitchfork formation extending off the 2017 / 2018 highs in AUD/USD for months now. Last week price responded to a sliding parallel of the dominant slope extending off the August highs (red) with the subsequent decline now approaching the median-line / 78.6% retracement at 7107/20.

A weekly close below this key threshold is needed to keep the immediate short-bias viable with a break below the yearly lows at 7085 exposing the lower parallel (currently ~1.7010) and the 2016 low-week close at 6970. Initial resistance stands at the September high-week reversal close at 7223 with broader bearish invalidation lowered to 7327.

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Bottom line: It’s make-or-break for Aussie heading into this key support zone and the monthly / quarterly open. From a trading standpoint, a good place to reduce short exposure and lower protective stops. We’ll be looking for a reaction / possible exhaustion down there for more guidance - I’ll publish an updated AUD/USD scalp report once we get further clarity in near-term price action. Keep in mind we’re just now beginning to carve out the October opening range with US Non-Farm Payrolls (NFP) on tap this Friday.

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AUD/USD Trader Sentiment

AUD/USD Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.4 (58.4% of traders are long) – weak bearish reading
  • Traders have remained net-long since September 24th; price has moved 0.9% lower since then
  • Long positions are0.5% higher than yesterday and 11.1% higher from last week
  • Short positions are 5.1% lower than yesterday and 17.9% 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.

See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!

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Previous Weekly Technical Perspectives

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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com

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