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Australian Dollar Price Outlook: Aussie Breakout Potential into FOMC

Australian Dollar Price Outlook: Aussie Breakout Potential into FOMC

2019-09-17 18:30:00
Michael Boutros, Technical Strategist

The Australian Dollar is virtually unchanged against the US Dollar since the start of the week and heading into tomorrow FOMC interest rate decision, the focus is on a break of the objective weekly opening-range for guidance. These are the updated targets and invalidation levels that matter on the AUD/USD price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Euro price setup and more.

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Australian Dollar Price Chart – AUD/USD Daily

Australian Dollar Price Chart - AUD/USD Daily - Aussie Trade Outlook - Technical Forecast

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

Technical Outlook: In my last Australian Dollar Price Outlook we noted that AUD/USD was vulnerable on the back of a 2.6% advance off the yearly lows with, “initial support at 6827/32 backed by 6803 – both levels of interest for possible downside exhaustion / long-entries IF reached.” Price registered a low today at 6830 before rebounding sharply – so was that it?

Its too early to tell, but with the FOMC on tap tomorrow, we’re look for clarity here. A topside breach above the high-close at 6880 would put Aussie back in play targeting 6911 and confluence resistance at the median-line / 61.8% retracement at 6927. Key daily support now 6791 with broader bullish invalidation at 6760/66.

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Australian Dollar Price Chart – AUD/USD 120min

Australian Dollar Price Chart - AUD/USD 120min - Aussie Trade Outlook - Technical Forecast

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

Notes: A closer low at Aussie price action sees AUD/USD continuing to trade within the confines of an ascending pitchfork formation extending off the August / September lows with the recent pullback finding support today at lower parallel / 6827/32. Initial resistance objectives at the weekly open at 6862 backed by 6880/84 – A topside breach of the weekly opening-range would be needed to mark resumption targeting 6911 and 6924/27.

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

Bottom line: Aussie is rebounding off confluence support today and we’re on the lookout for a low / validation of a low in price. From at trading standpoint, the focus remains weighted to the topside while within this formation targeting a topside breach of the weekly range. Weakness beyond 6815 would suggest a larger correction is underway. Stay nimble here- expect volatility with the Fed is on tap tomorrow – IF price spikes lower, look to fade a final drop closer to daily slope support / the low-day close. A stretch into 6920s would have me looking for topside exhaustion / short entries. Review my latest Australian Dollar Weekly Price Outlook for a closer look at the longer-term AUD/USD technical trading levels.

Aussie Trader Sentiment – AUD/USD Price Chart

Aussie Trader Sentiment - Australian Dollar vs US Dollar Price Chart - AUD/USD Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.11 (52.6% of traders are long) – weak bearish reading
  • Traders have remained net-long since July 19th; price has moved 1.5% lower since then
  • Long positions are 5.6% higher than yesterday and 9.5% lower from last week
  • Short positions are2.0% higher than yesterday and 13.9% higher 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 Aussie retail positioning are impacting trend- Learn more about sentiment!


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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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