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Australian Dollar Forecast: Aussie Rally Tempting a Turn?

Australian Dollar Forecast: Aussie Rally Tempting a Turn?

Michael Boutros, Strategist

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

  • Australian Dollar technical trade level update - Weekly Chart
  • AUD/USD breakout to fresh yearly highs stalls at Fibonacci resistance
  • Aussie bulls look for breach above 7635 to mark resumption – key support at 7295
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The Australian Dollar rallied more than 4% against the US Dollar in December with AUD/USD turning from long-term Fibonacci resistance at multi-year highs last week. While the broader outlook remains constructive on the back of the recent breakout, the advance may be vulnerable heading into the close of the year as Aussie approaches uptrend resistance targets just higher. These are the updated targets and invalidation levels that matter on the AUD/USD weekly price chart heading into the close of the year. for an in-depth breakdown of this Aussie technical setup and more.

Australian Dollar Price Chart – AUD/USD Weekly

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

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

Notes: In my last Australian Dollar Weekly Price Outlook we noted that Aussie had, “cleared a major resistance confluence last week - the immediate focus is on a break of the 7300-7413 range for guidance with a close above needed to mark resumption towards fresh multi-year highs.” AUD/USD ripped higher days later with the breakout rallying for five consecutive weeks to fresh yearly highs before stalling last week at the 38.2% Fibonacci retracement of the 2011 decline at 7635.

Initial weekly support rests with the slope parallel extending off the late-June lows / December 2017 lows at 7503 with the broader outlook constructive while above 7246/95. A break / weekly close below this threshold would be needed to suggest a more significant high is in place. A breach higher from here exposes subsequent resistance objectives at the 2018 objective yearly open / upper parallel near ~7800 – look for a larger reaction there IF reached for guidance.

Bottom line: The Australian Dollar breakout has extended into the first major resistance target since breaching the yearly range highs and the immediate advance may be vulnerable in the days ahead. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops- be on the lookout for downside exhaustion ahead of channel support / 7295 IF price is indeed heading higher. Ultimately a larger pullback here may offer more favorable opportunities closer to uptrend supportwith a topside breach keeping the focus on 7800. Review my latest 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 Positioning - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-short AUD/USD - the ratio stands at -1.64 (37.95% of traders are long) – typically bullishreading
  • Long positions are 4.52% lower than yesterday and 4.39% lower from last week
  • Short positions are16.15% lower than yesterday and 30.66% lower 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current AUD/USD price trend may soon reverse lower despite the fact traders remain net-short

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Key Australia / US Data Releases

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

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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