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Australian Dollar Price Outlook: Aussie Plunge Pauses at Key Support

Australian Dollar Price Outlook: Aussie Plunge Pauses at Key Support

2020-03-19 18:30:00
Michael Boutros, Strategist
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Australian Dollar Technical Price Outlook: AUD/USD Weekly Trade Levels

  • Australian Dollar technical trade level update - Weekly Chart
  • AUD/USD plunges to fresh seventeen-year lows amid Coronavirus panic sell-off
  • Aussie key support 5500- broader risk remains lower sub-6200

The Australian Dollar plummeted nearly 6% against the US Dollar this week with Aussie poised to mark the largest weekly range / loss since the October 2008 yearly lows. The Coronavirus panic sell-off takes price into a critical support confluence and the focus is on the weekly close with the broader short-bias vulnerable while above Wednesday’s low. These are the updated targets and invalidation levels that matter on the AUD/USD weekly price chart. for an in-depth breakdown of this Loonie trade setup and more.

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Australian Dollar Price Chart – AUD/USD Weekly

Australian Dollar Price Chart - AUD/USD Weekly - Aussie vs US Dollar Trade Outlook - Technical Forecast

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

Notes: n my last Australian Dollar Price Outlook we noted that the AUD/USD breakdown was, “testing downtrend support and the immediate focus is on a reaction off this slope.” The focus was the lower parallel of the descending pitchfork formation / 2008 low-close at 6196- a break below this threshold fueled a massive sell-off in Aussie with price plummeting to fresh seventeen-year lows as weekly RSI probes deep into oversold territory.

The decline rebounded just pips ahead of a critical support confluence this week at 5495/99- a region defined by the 88.6% retracement of the 2001 advance and the 61.8% extension of the 2011 decline. A break / close below would be needed to mark resumption with such a scenario exposing the July 2002 low at 5229. Initial support steady at t he 2001 high at 5724. Initial resistance at 6006 with bearish invalidation now lowered to 6195.

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Bottom line: The Australian Dollar collapse has responded to a key support confluence and leaves the broader short-bias at risk while above 5500. From a trading standpoint, reducing short-exposure / lower protective stops on tests into this threshold- be on the lookout for possible downside exhaustion and watch the weekly close with respect to 5724 for guidance. I’ll publish and updated Australian Dollar Price Outlook for a closer look at 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 Trader Sentiment - AUD/USD Price Chart - Aussie vs US Dollar Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.54 (60.58% of traders are long) – bearish reading
  • Long positions are 17.26% lower than yesterday and 20.04% lower from last week
  • Short positions are12.60% lower than yesterday and 26.68% higher 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. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current Aussie price trend may soon reverse higher despite the fact traders remain net-long.
AUD/USD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 17% 20% 19%
Weekly 2% 41% 18%
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--- 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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