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Australian Dollar Forecast: AUD/USD Five-Week Plunge Halted at Support

Australian Dollar Forecast: AUD/USD Five-Week Plunge Halted at Support

Michael Boutros, Strategist

Australian Dollar Technical Price Outlook: AUD/USD Weekly Trade Levels

  • Australian Dollar technical trade level update - Weekly Chart
  • AUD/USD plummets into key trend support - bears vulnerable while above into August open
  • Aussie risk for inflection into ~7328, key resistance / bearish invalidation at 7531
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The Australian Dollar fell for a fifth consecutive week against the US Dollar with AUD/USD down 0.32% ahead of the New York close on Friday. Despite the losses, Aussie has continued to defend a key technical threshold at yearly downtrend support and while the broader outlook remains titled to the downside, the immediate decline may be vulnerable heading into the August open while above this key level. These are the updated targets and invalidation levels that matter on the AUD/USD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie technical setup and more.

Australian Dollar Price Chart – AUD/USD Weekly

Australian Dollar Forecast: AUD/USD Five-Week Plunge Halted at Support

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

Notes:In last week’s Australian Dollar Weekly Price Outlook we noted that the AUD/USD, “Australian Dollar sell-off has plunged into confluent trend support and leaves the broader short-bias vulnerable while above this key technical threshold- it’s make-or-break here.” The outlook remains unchanged post-FOMC over a week later with Aussie continuing to hold just above critical support at the May 2017 lows around 7328- the bears remain at risk.

The decline off the yearly highs remains within the confines of a descending pitchfork formation with AUD/USD continuing to grind into the lower parallels this week. Initial resistance steady at the 52-week moving average near ~7500 with near-term bearish invalidation at the median-line / March swing low at 7531- a breach / weekly close above would be needed to suggest a more significant low is in place. A break below this critical support zone would risk another bout of accelerated Aussie losses with such a scenario exposing subsequent objectives at the 1.618% Fibonacci extension of the yearly decline at 7122 and the 2020 & 2019 yearly opens / 38.2% retracement at 7016/52.

Bottom line: The Australian Dollar held confluent uptrend support for a second week- the focus remains on possible inflection down here with the short-bias vulnerable while above 7328 heading into the August open. From a trading standpoint a good zone to reduce short-exposure / lower protective stops- look for a reaction / inflection on a stretch towards the median-line / March lows IF reached. I’ll publish an updated Australian Dollar Price Outlook once we get further clarity on the near-term AUD/USD technical trade levels.

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

Australian Dollar Trader Sentiment – AUD/USD Price Chart

Australian Dollar Forecast: AUD/USD Five-Week Plunge Halted at Support
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.45 (59.17% of traders are long) – typically bearish reading
  • Long positions are 0.91% lower than yesterday and 0.14% lower from last week
  • Short positions are10.27% higher than yesterday and 1.21% 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 less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed AUD/USD trading bias from a sentiment standpoint.

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Key Australia / US Data Releases

Australian Dollar Forecast: AUD/USD Five-Week Plunge Halted at Support

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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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