Australian Dollar Price Outlook: Has AUD/USD Finally Found Support?
Aussie, AUD/USD Talking Points:
- AUD/USD has been in the midst of a grinding sell-off for the better part of the past nineteen months, including a brutal three-week-run from mid-July into early-August.
- The past two weeks, however, have shown a penchant for support to hold around the psychological .6750 level. This may bring on a pullback or reversal theme but, as yet, no clear evidence suggests that’s close to taking place.
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AUD Technical Forecast: Neutral
It’s been a rough year so for AUD/USD and it didn’t start out very well, either. We can even extend that back to the beginning of 2018, as there hasn’t really been much for Aussie bulls to rejoice since the start of last year.
After topping-out above the .8100 level in January of 2018, the pair dropped by more than 1,000 pips over the next nine months. A bit of support early in Q4 helped to stem the declines but, sellers were again ready to pounce after the 2019 open, aggressively enough that a flash crash showed in AUD/USD as prices tipped-down to .6750 to find a bit of support. That price, as it turns out, would continue to carry a pull in Australian Dollar price action to go along with a bit of historical intrigue.
AUD/USD Monthly Price Chart
Sellers weren’t yet finished after the January flash crash and following a mild bounce, bears came back to drive the pair-lower over the next seven months, bringing us to today… That same .6750 level has helped to hold the lows over the past three weeks and sellers have not yet been able to leave it behind despite an aggressive test-below last week.
AUD/USD Weekly Price Chart
Have We Seen Capitulation?
Given that elongated wick from last week’s candle and the fact that sellers were unable to re-test below .6750 this week, even with a very strong US Dollar in the mix, and there’s stacking evidence that the bearish trend in the Australian Dollar is coming into question. Whether this brings a retracement or reversal scenario has yet to be seen but, the evidence is enough to move away from a bearish technical bias on the pair until more information presents itself.
For bullish scenarios, a topside break above the August swing high at .6821 could open the door for a trip back towards the .6900 level. This is around the mid-July swing-low and as yet, that prior area of support hasn’t shown much for resistance. For bearish strategies, a break of the .6735 swing-low exposes the .6675 area, after which that next swing-low could be sought out around .6625 or perhaps even as deep as .6500. The latter two prices are both levels that haven’t been in play since March of 2009; but, at this point, it appears that theme may have to wait for a bit before it comes back into play.
AUD/USD Four-Hour Price Chart
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.