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Australian Dollar 1Q Forecast: Aussie Breakout Risks Exhaustion High

Australian Dollar 1Q Forecast: Aussie Breakout Risks Exhaustion High

Michael Boutros, Strategist


  • Australian Dollar technical trade level update – quarterly forecast
  • AUD/USD breakout to multi-year highs may be vulnerable into 1Q
  • Aussie advance remains constructive above 7246 – key resistance into 7800

Coming Soon! Download the NEW 1st Quarter Forecast Live on Monday on our Free Trading Guides Page!

Heading into the start of Q4 we highlighted the risk for topside exhaustion in AUD/USD after a breakout of the yearly opening-range fueled a rally into multi-year downtrend resistance. We noted support at a, “key pivot zone at 0.7016/42- a region defined by the objective 2019 / 2020 yearly opens,” with a, “topside breach exposing the 76-handle and beyond.” Aussie briefly registered an intra-week low at 6991 in early November before reversing sharply higher with the rally extending another 8.4% to trade to a high of 7579 ahead of the December close. At the time off this report, AUD/USD has rallied six of the past seven weeks – can the advance carry on into 2021?

Australian Dollar Price Chart – AUD/USD Monthly

Australian Dollar 1Q Forecast: Aussie Breakout Risks Exhaustion High

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

Notes:A breakout of the slope-line extending off the 2018 highs keeps the broader focus higher heading into the start of the year with the advance quickly approaching initial resistance at the 38.2% retracement of the 2011 decline at 7635. Note that monthly momentum is extending into levels not seen since the 2011 high and highlights the threat to the immediate long-bias heading into the open of 2021.

Bottom line: The Australian Dollar price rally has matured with an advance of more than 37% off the yearly lows risking topside exhaustion in the months ahead. Upcoming resistance targets are in view heading into the yearly open and we’re on the lookout for inflection on a stretch higher. Get a closer look at the setup as well as the technical invalidation levels that matter heading into 2021 in our latest quarterly guides!

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

--- 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.