Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
AUD/USD Price Outlook: Australian Dollar Affixed to its 200-DMA

AUD/USD Price Outlook: Australian Dollar Affixed to its 200-DMA

Rich Dvorak, Analyst

Share:

What's on this page

AUSTRALIAN DOLLAR OUTLOOK: AUD/USD PRICE CHART RIPS INTO RESISTANCE – AUSSIE BREAKOUT OR REVERSAL LOOMS

  • Spot AUD/USD prices have surged 4% since October’s swing low which has been due primarily to US-China trade deal optimism that flooded the market with risk appetite
  • The Australian Dollar is now on the brink of breaking out from a 23-month long downtrend, but its 200-day moving average has potential to thwart a sustained rebound attempt
  • IG Client Sentiment data notes a massive drop in net-long positioning on spot AUD/USD as Australian Dollar retail forex traders turn increasingly bearish toward the Aussie

Australian Dollar bears have been battered over the last 3-months with the recent spike in the Aussie – driven largely by to investor risk appetite seeping back into the market – pushing spot AUD/USD higher by 4% since its October swing low. A plunge in currency volatility and rise in relative attractiveness of the carry trade have also helped facilitate the rise in spot AUD/USD.

Though AUD/USD prices now face an intimidating zone of confluent resistance that could possibly send the Australian Dollar pivoting back lower. The 200-day simple moving average illustrates the Australian Dollar’s long-term downtrend etched out since January last year, which is a critical technical level that may very well hinder further upside in the Aussie – just as it did this past July.

AUD/USD PRICE CHART: DAILY TIME FRAME (JULY 2019 TO DECEMBER 2019)

AUDUSD Price Chart Australian Dollar Outlook Technical Analysis

Chart created by @RichDvorakFX with TradingView

AUD/USD has peaked its head above the downward-sloping trendline extended from July 19 and November 05 intraday highs, however, and there has been a healthy rise in its relative strength index.

Though the 0.6925 price level – an area of technical resistance highlighted by the 61.8% Fibonacci retracement of its July to October bearish leg – has so far proved to be a daunting obstacle that spot AUD/USD has yet to overcome. Correspondingly, the Australian Dollar’s lack of follow-through on its recent topside breakout is a bit discouraging.

AUD/USD Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% -10% -3%
Weekly 25% -40% -4%
Learn how to use Sentiment in your trading strategy
Get My Guide

Yet, the Australian Dollar still has potential to keep rising with US-China trade deal cheerfulness likely to provide the Aussie with a positive tailwind. Likewise, there are several high-impact data releases and event risk scheduled on the economic calendar for next week which could provide fundamental catalysts for the next big move in spot AUD/USD.

AUD/USD PRICE CHART: WEEKLY TIME FRAME (OCTOBER 2017 TO DECEMBER 2019)

AUDUSD Price Chart Australian Dollar Outlook Technical Analysis

Chart created by @RichDvorakFX with TradingView

Turning to a weekly AUD/USD chart helps drown out some of the noise observed on a shorter time frame. The bottoming attempt by the Australian Dollar around the 0.6800 handle has likely contributed to the recent Bollinger Band squeeze – typically a precursor to a spike in volatility.

Although spot AUD/USD prices are currently riding the upper channel of its Bollinger Band, there are signs that the Bollinger Band width may be expanding which could enable a prolonged rally in the Australian Dollar.

That said, Aussie bulls could look to the psychologically-significant 0.7000 level as a possible upside target. On the other hand, spot AUD/USD remains at risk of reversing back lower until confirmation of a breakout higher is povided. Thus, the Aussie could still slide back toward the 0.6800 level before year-to-date lows come back into focus.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES