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Australian Dollar Forecast: AUD/USD Breakout Pending- Aussie Setup

Australian Dollar Forecast: AUD/USD Breakout Pending- Aussie Setup

2020-10-08 15:30:00
Michael Boutros, Strategist
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Australian Dollar Technical Price Outlook: Near-term Trade Levels

  • Australian Dollar technical trade level update – Daily & Intraday Charts
  • AUD/USD sets monthly opening-range below trend resistance
  • Risk for further losses sub-7256 – key near-term support 7076
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The Australian Dollar is virtually unchanged against the US Dollar this week with Aussie carving a well-defined weekly / October opening-range just below trend resistance. The immediate focus is on a break of this range with AUD/USD still at risk for further losses after breaking uptrend support last month. These are the updated targets and invalidation levels that matter on the AUD/USD price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Aussie setup and more.

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Australian Dollar Price Chart – AUD/USD Daily

Australian Dollar Price Chart - AUD/USD Daily - Aussie Trade Outlook - Technical Forecast

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

Technical Outlook: In last month’s Australian Dollar Price Outlook we noted that AUD/USD was approaching a key inflection zone at 7125/31 with a break / close below, “needed to suggest a larger correction is underway with such a scenario risking a decline towards the 2020 / 2019 yearly opens at 7016/42.” Aussie registered a low at 7005 in the following days before rebounding sharply into the close of September.

The October opening-range is now straddling the 7125/31 region with and outside-day reversal off the highs on Tuesday highlighting the risk remains for a deeper setback here. Resistance stands at the monthly range highs at 7209 backed by the 61.8% Fibonacci retracement at 7256. Ultimately a breach / close above confluence resistance at 7324/29 is needed to mark resumption of the March uptrend.

Australian Dollar Price Chart – AUD/USD 120min

Australian Dollar Price Chart - AUD/USD 120min - Aussie Trade Outlook - Technical Forecast

Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of a descending pitchfork formationextending off the monthly highs with a rebound off the lower parallel early in the week now trading just below slope resistance / weekly open at 7165. Near-term bearish invalidation now lowered to 7208. Initial support rests at 7131 backed by 7076/84- look for a larger reaction there IF reached with a close below critical support at 7016/42 needed to suggest a larger correction is underway here.

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Bottom line: Australian Dollar has carved a well-defined monthly / weekly opening-range and price remains at risk for a deeper setback while within this multi-week downtrend. From at trading standpoint, look for topside exhaustion ahead of the September channel resistance with a break below 7073/84 needed for another challenge at key yearly open support. Ultimately, a larger setback may offer more favorable opportunities with a topside breach / close above 7329 needed to mark resumption. Review my latest Australian Dollar Weekly Price Outlook for a closer look at the longer-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 Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-short AUD/USD - the ratio stands at -1.46 (40.60% of traders are long) – bearish reading
  • Long positions are 2.55% higher than yesterday and 9.61% lower from last week
  • Short positions are7.24% lower than yesterday and 24.94% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed AUD/USD trading bias.
AUD/USD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -20% -4% -9%
Weekly 1% 8% 6%
Learn how shifts in Aussie retail positioning impact trend
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Key Australia / US Data Releases

Key Australia / US Data Releases - AUD/USD Economic Calendar - Aussie Event Risk - Trade Outlook

Economic Calendar - latest economic developments and upcoming event risk.

Active Technical Setups

- Written by Michael Boutros, 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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