Australian Dollar Forecast: AUD/USD Collapses to Fresh Yearly Low
Australian Dollar Technical Price Outlook: AUD/USD Weekly Trade Levels
- Australian Dollar technical trade level update - Weekly Chart
- AUD/USD collapses through key trend support – risk for further losses
- Aussie support 7122, 7016-52 (key) - resistance 7281, bearish invalidation at 7328
The Australian Dollar plummeted more than 3% against the US Dollar this week with a breakdown in AUD/USD taking price to fresh yearly lows. A breakout of a multi-month range keeps the outlook weighted to the downside in the days ahead with Aussie already testing initial support objectives on Friday. 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
Notes:In my last Australian Dollar Weekly Price Outlook we noted that AUD/USD, “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.” We warned that, “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.”Monthly open support at 7328 held for nearly five-weeks before breaking on Tuesday with Aussie plummeting through pitchfork support to fresh yearly lows.
The decline is now testing the first major support target at 7122 with a key technical pivot zone just lower at 7016/52- risk for downside exhaustion into these levels. Initial weekly resistance now stands at the August 2020 high-week reversal close at 7281 with bearish invalidation now lowered to 7328.
Bottom line: The Australian Dollar broke a major technical support confluence and keeps the focus lower in AUD/USD while below the objective August open at 7328. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops- rallies should be capped by 7281 IF price is indeed heading lower with a break here exposing critical support into the 70-handle. 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
- A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +2.10 (67.72% of traders are long) – typically bearish reading
- Long positions are 1.15% higher than yesterday and 5.30% higher from last week
- Short positions are3.52% lower than yesterday and 10.47% 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 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.
Key Australia / US Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
- Sterling (GBP/USD)
- Crude Oil (WTI)
- Canadian Dollar (USD/CAD)
- Euro (EUR/USD)
- Gold (XAU/USD)
- US Dollar Index (DXY)
- New Zealand Dollar (NZD/USD)
--- 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.