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Aussie Price Outlook: Australian Dollar Surges into Trend Resistance

Aussie Price Outlook: Australian Dollar Surges into Trend Resistance

2019-10-22 19:00:00
Michael Boutros, Technical Strategist
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The Australian Dollar has rallied more than 3% against the US Dollar off the monthly lows with the a three-week advance now targeting confluence resistance at the upper bounds of a multi-month range in price. It’s make-or-break here for the bulls. These are the updated targets and invalidation levels that matter on the AUD/USD charts this week. Review this week's Strategy Webinar for an in-depth breakdown of this oil price setup and more.

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Australian Dollar Price Chart – AUD/USD Weekly

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

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

Notes: In my last Australian Dollar Weekly Price Outlook we noted that, “Aussie will need to stabilize into the start of October trade IF the September advance is to remain viable. From a trading standpoint, be on the lookout for an exhaustion low early next month with a breach above the June 2018 trendline needed to suggest a more significant low was registered in Q2.” AUD/USD rebounded off the August lows into the October open with the rebound now targeting resistance at the 2018 trendline / September highs at 6895.

This level is backed closely by the 61.8% retracement of the July decline at 6927- we’ll require a breach / close above this threshold to validate a larger reversal in price with such a scenario targeting key resistance at the yearly open / 61.8% retracement of the yearly range at 7042/59. Look for exhaustion / support ahead of 6800 on pullbacks with bullish invalidation set to the low-week close at 6768.

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

Bottom line: Aussie has been in a price range since the August lows with the recent recovery now eyeing confluence resistance at the upper bounds. From a trading standpoint, a good place to reduce long-exposure / raise protective stops – be on the lookout for possible exhaustion here but we’ll broadly favor fading weakness while above 6768 targeting a topside breach of this multi-month channel resistance. I’ll publish an updated Australian Dollar Price Outlook once we get further clarity on the near-term AUD/USD technical trading levels.

Australian Dollar Trader Sentiment – AUD/USD Price Chart

Australian Dollar Trader Sentiment - AUD/USD Price Chart - Aussie Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at -1.01 (49.92% of traders are long) – neutral reading
  • Long positions are 0.20% lower than yesterday and 22.97% lower from last week
  • Short positions are14.56% higher than yesterday and 91.75% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUD/USD-bullish contrarian trading bias from a sentiment standpoint.

See how shifts in Crude Oil retail positioning are impacting trend- Learn more about sentiment!

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Previous Weekly Technical Charts

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--- Written by Michael Boutros, Technical Currency 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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